NEW YORK, Aug 30 (Reuters) – A prime U.S. banking regulator has discovered that main lenders are within the early levels of assessing and managing the dangers local weather change poses to their companies, and that important work is required in some areas, three folks acquainted with the matter stated.
In a letter despatched in latest days to the banks’ chief executives, the OCC stated it discovered all had accomplished some stage of danger identification, however approaches and levels of growth various extensively. The letter, the contents of which had been described to Reuters by sources, has not been beforehand reported.
It sheds extra mild on the shortcomings regulators have recognized in lots of banks’ preparations to handle local weather dangers, which some business consultants argue places trillions of {dollars} of property in jeopardy.
The OCC discovered that the majority banks had been early within the technique of incorporating local weather danger into features akin to strategic and operational planning, inner audit and assessments of their danger urge for food, the sources stated.
It additionally discovered that a number of had not began working with local weather state of affairs evaluation and that important work was wanted to implement deliberate governance frameworks round local weather danger, the sources stated.
An OCC spokesperson stated the company doesn’t touch upon supervisory actions. The sources requested anonymity to speak about confidential regulatory issues.
Banks and regulators around the globe are grappling with learn how to measure and handle the results a warming local weather and alterations to power coverage can have for the monetary system.
Some business executives query, although,
whether or not the long-term technique of local weather change poses a extreme rapid menace to financial institution stability in the identical approach {that a} recession may.
The OCC carried out its first evaluate in 2023, conducting a number of conferences with banks, and revealed steerage on managing dangers alongside the Federal Deposit Insurance coverage Company and Federal Reserve.
The OCC’s letter describes a variety of follow observations and doesn’t spell out particular actions it needs the banks to take, the sources stated.
It stated it can proceed to conduct risk-based supervisory actions, the sources added.
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Reporting by Isla Binnie and Nupur Anand in New York; Extra reporting by Saeed Azhar; Modifying by Jonathan Oatis and Stephen Coates
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