OCC and Basel Committee Issue Separate Proposed Principles for the Management of Climate-Related Financial Risks

5 January 2022
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Key takeaways:
  • Last month, the OCC released for public comment draft principles for the management of climate-related financial risk by OCC-supervised large banks (the “OCC Principles”). Public comments received on the OCC Principles will inform more detailed guidance on the topic that the OCC plans to issue in 2022.
  • The OCC Principles align closely with a similar set of principles released by the Basel Committee on Banking Supervision one month earlier (the “Basel Committee Principles”).
  • Both sets of principles are intended to provide guidance for managing climate-related financial risks, covering topics such as corporate governance; policies, procedures and limits; strategic planning; risk appetite, risk management and audit; data aggregation and reporting; scenario analysis; credit risk; liquidity risk; market risk; operational risk; legal/compliance risk; and other nonfinancial risk.