A report released Friday by a staff committee of the Treasury-led, interagency panel on financial stability oversight cites progress on activities underway among member agencies to support capacity building and disclosure, address data gaps, and assess climate-related financial risks.
The report is from the Financial Stability Oversight Council’s (FSOC) Climate-related Financial Risk Committee (CFRC), created in 2021 to identify priority areas for assessing and mitigating climate-related risks to the financial system. The panel also helps coordinate information sharing and other activities focused on such risks across FSOC member agencies.
The FSOC issued a climate report in October 2021, and the CFRC reports periodically on member agencies’ progress in implementing its recommendations.
“FSOC and its member agencies continue to view climate-related financial risks as a key priority and intend to advance the recommendations in the FSOC Climate Report,” the agency said in a release. “Staff participating on the CFRC intend to continue using it as a forum for interagency engagement, coordination, and information sharing. Staff also intend to focus on data sharing and the development of key risk indicators for risk assessment purposes, and further explore the intersection between physical risk, real estate, banking, insurance, and household finances.”
Friday’s report from the CFRC gives the latest updates on member agencies’ progress in implementing the climate report’s recommendations. The most recent of those cited is the Federal Reserve’s launch in January of a pilot climate scenario analysis exercise for the six largest bank holding companies.
As reported previously, the Fed said that Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo were participating in the pilot, which is “distinct and separate” from stress tests and is expected to concluded around year-end.
The Fed said it expected to publish insights gained from the pilot at an aggregate level, reflecting what has been learned about climate risk management practices and how insights from scenario analysis will help identify potential risks and promote effective risk management practices. No firm-specific information will be released, it said.
CFRC staff progress report (July 2023)