The Guidance would increase expectations for regulated financial institutions to identify, measure, monitor, and control climate-related financial risks.
By Betty M. Huber, Arthur S. Long, Pia Naib, Austin J. Pierce, and Deric Behar

For the past few years, the New York State Department of Financial Services (DFS) Superintendent has prioritized setting the pace in climate risk management for financial institutions that it supervises. On December 21, 2022, the DFS proposed Guidance for New York State-Regulated Banking and Mortgage Institutions Relating to Management of Safety & Soundness Risks from Climate Change (the Guidance). The Guidance follows on the DFS’ October 2020 letter to CEOs of its regulated financial institutions, which announced that DFS was developing a strategy for integrating climate-related risks into its supervisory mandate. The letter also announced that DFS would engage with banking organizations (and coordinate with US and international counterparts) to develop effective supervisory practices and guidance to mitigate the financial risks from climate change.