Feedback Request on the Principles for CRFRM
Summary
SIFMA and the International Swaps and Derivatives Association, Inc. (ISDA) provided comments on the Office of the Comptroller of the Currency’s (OCC) request for feedback on the Principles for Climate-Related Financial Risk Management for Large Banks released on December 16, 2021.
Excerpt
February 14, 2022
By electronic submission
Chief Counsel’s Office
Attention: Comment Processing
Office of the Comptroller of the Currency
400 7th St. SW, Suite 3E-218
Washington, DC 20219
Re: Docket ID OCC-2021-0023
Ladies and Gentlemen:
The International Swaps and Derivatives Association, Inc. and Securities Industry and Financial Markets Association (collectively, the “Associations”)1 appreciate the opportunity to provide input on the Office of the Comptroller of the Currency’s (the “OCC”) request for feedback on the Principles for Climate-Related Financial Risk Management for Large Banks (“Principles”) released on December 16, 2021.2 The Associations support the OCC’s goal to enhance the safe and sound management of banks’ exposures to climate-related financial risks. Given the intensifying pace of climate change, it is important to have a continuous dialogue with banking regulators to develop and determine the best approach to the treatment of climate-related financial risks. We welcome the OCC’s principles-based approach to addressing risk management practices related to climate risk. We support the OCC’s efforts to establish regulatory principles and guidance surrounding new and emerging climate-related financial risks that align with the existing risk management regulatory framework. We believe that climate-related financial risks are drivers of existing risks. Accordingly, banks are at a developmental stage in embedding these risks into their existing risk management frameworks.
Currently, our member banks’ risk management practices, in the context of climate related financial risk, have centered around the identification and evaluation of potential climate-related financial risks under different scenarios, specifically focusing on assessing potential materiality for different risks over different time horizons.3 These efforts have helped identify some inadequacies and challenges, including data limitations and complexities arising from a variety of different scenarios and time horizons.
1 Please see Appendix for information regarding each Association.
2 https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-62.html
3 To-date, banks have employed various time horizons in determining climate-related risk.