The Federal Reserve Board of Governors, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) this week released principles for banks with over $100 billion in assets to use in managing financial risks related to climate. “The financial impacts that result from the economic effects of climate change and the transition to a lower carbon economy,” the agencies said, “pose an emerging risk to the safety and soundness of financial institutions and the financial stability of the United States.”
A failure to properly manage these risks can lead banks to reduce essential services to consumers in times of crisis, or even to bank failures or larger systemic collapses. Potential harms could include disproportionate impacts on the financially vulnerable, including low- to moderate-income (LMI) and other disadvantaged…