Federal Register / Vol. 88, No. 208 / Monday, October 30, 2023 / Notices 74183 

1OCC Bulletin 2021–62, Risk Management: 

Principles for Climate-Related Financial Risk 

Management for Large Banks; Request for Feedback, 

(December 16, 2021), https://occ.gov/newsissuances/bulletins/2021/bulletin-2021-62.html. 

2 87 FR 19507 (April 4, 2022). 

3 87 FR 75267 (December 8, 2022). 

4Physical risks refer to the harm to people and 

property arising from acute, climate-related events, 

such as hurricanes, wildfires, floods, and 

heatwaves, and chronic shifts in climate, including 

higher average temperatures, changes in 

precipitation patterns, sea level rise, and ocean 

acidification. Transition risks refer to stresses to 

institutions or sectors arising from the shifts in 

policy, consumer and business sentiment, or 

technologies associated with the changes that 

would be part of a transition to a lower carbon 

economy. 

Washington, DC 20551–0001, not later 

than November 27, 2023. 

A. Federal Reserve Bank of Boston 

(Prabal Chakrabarti, Senior Vice 

President) 600 Atlantic Avenue, Boston, 

Massachusetts 02210–2204. Comments 

can also be sent electronically to 

BOS.SRC.Applications.Comments@

bos.frb.org: 

1. 1864 Bancorp, MHC, and 1864 

Bancorp, Inc., both of South Easton, 

Massachusetts; to become bank holding 

companies by acquiring all of the voting 

shares of North Easton Savings Bank, 

South Easton, Massachusetts. 

B. Federal Reserve Bank of Dallas 

(Karen Smith, Director, Mergers & 

Acquisitions) 2200 North Pearl Street, 

Dallas, Texas 75201–2272. Comments 

can also be sent electronically to 

Comments.applications@dal.frb.org: 

1. The 2013 Monte Hulse Family 

Irrevocable Trust I, Waco, Texas; to 

acquire up to 30 percent of the voting 

shares of FCT Bancshares, Inc., Waco, 

Texas, and thereby indirectly acquire 

voting shares of First National Bank of 

Central Texas, Waco, Texas. 

C. Federal Reserve Bank of San 

Francisco (Joseph Cuenco, Assistant 

Vice President, Formations, 

Transactions & Enforcement) 101 

Market Street, San Francisco, California 

94105. Comments can also be sent 

electronically to: sf.fisc.comments 

.applications@sf.frb.org. 

1. WAFD, Inc., Seattle, Washington; to 

acquire Luther Burbank Corporation, 

and thereby indirectly acquire Luther 

Burbank Savings, both of Santa Rosa, 

California. 

Board of Governors of the Federal Reserve 

System. 

Michele Taylor Fennell, 

Deputy Associate Secretary of the Board. 

[FR Doc. 2023–23912 Filed 10–27–23; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

[Docket ID OCC–2022–0023] 

FEDERAL RESERVE SYSTEM 

[Docket No. OP–1793] 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

RIN 3064–ZA32 

Principles for Climate-Related 

Financial Risk Management for Large 

Financial Institutions 

AGENCY: Office of the Comptroller of the 

Currency (OCC), Treasury; Board of 

Governors of the Federal Reserve 

System (Board); and Federal Deposit 

Insurance Corporation (FDIC). 

ACTION: Final interagency guidance. 

SUMMARY: The OCC, Board, and FDIC 

(together, the agencies) are jointly 

issuing principles that provide a highlevel framework for the safe and sound 

management of exposures to climaterelated financial risks (principles). 

Although all financial institutions, 

regardless of size, may have material 

exposures to climate-related financial 

risks, these principles are intended for 

the largest financial institutions, those 

with over $100 billion in total 

consolidated assets. The principles are 

intended to support efforts by large 

financial institutions to focus on key 

aspects of climate-related financial risk 

management. 

DATES: The final interagency guidance is 

available on October 30, 2023. 

FOR FURTHER INFORMATION CONTACT: 

OCC: Tamara Culler, Director for 

Governance and Operational Risk 

Policy, Bank Supervision Policy, at 

(202) 649–6670, Russell D’Costa, 

Program Analyst, Office of Climate Risk, 

at (202) 649–8283, or Alison 

MacDonald, Senior Counsel, Chief 

Counsel’s Office, at (202) 649–5490, 

Office of the Comptroller of the 

Currency, 400 7th Street SW, 

Washington, DC 20219. If you are deaf, 

hard of hearing, or have a speech 

disability, please dial 7–1–1 to access 

telecommunications relay services. 

Board: Anna Lee Hewko, Associate 

Director, (202) 530–6260; Morgan Lewis, 

Manager, (202) 452–2000; or Matthew 

McQueeney, Senior Financial 

Institution Policy Analyst II, (202) 452– 

2942 Division of Banking Supervision 

and Regulation; or Asad Kudiya, 

Assistant General Counsel, (202) 475– 

6358; Flora Ahn, Senior Special 

Counsel, (202) 452–2317; Matthew 

Suntag, Senior Counsel, (202) 452–3694; 

Katherine Di Lucido, Attorney, (202) 

452–2352; or David Imhoff, Attorney, 

(202) 452–2249, Legal Division, Board of 

Governors of the Federal Reserve 

System, 20th and C Streets NW, 

Washington, DC 20551. For the hearing 

impaired and users of TTY–TRS, please 

call 711 from any telephone, anywhere 

in the United States. 

FDIC: Andrew D. Carayiannis, Chief, 

Policy and Risk Analytics Section, 

acarayiannis@fdic.gov; Lauren K. 

Brown, Senior Policy Analyst, Exam 

Support Section, laubrown@fdic.gov; 

Amy L. Beck, Corporate Expert, 

Sustainable Finance, ambeck@fdic.gov; 

Capital Markets and Accounting Policy, 

Division of Risk Management 

Supervision, 202–898–6888; Jennifer M. 

Jones, Counsel, jennjones@fdic.gov; 

Karlyn Hunter, Counsel, kahunter@

fdic.gov; Amanda Ledig, Senior 

Attorney, aledig@fdic.gov; Supervision, 

Legislation, and Enforcement Branch, 

Legal Division, Federal Deposit 

Insurance Corporation, 550 17th Street 

NW, Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On December 16, 2021, the OCC 

issued draft Principles for ClimateRelated Financial Risk Management for 

Large Banks (OCC draft principles) and 

requested feedback from the public with 

comments due on February 14, 2022.1

On April 4, 2022, the FDIC issued a 

Request for Comment on a Statement of 

Principles for Climate-Related Financial 

Risk Management for Large Financial 

Institutions (FDIC draft principles) with 

comments due on June 3, 2022.2 On 

December 2, 2022, the Board issued 

draft Principles for Climate-Related 

Financial Risk Management for Large 

Financial Institutions (Board draft 

principles) with comments due on 

February 6, 2023.3

Financial institutions are likely to be 

affected by both the physical risks and 

transition risks associated with climate 

change (collectively, climate-related 

financial risks).4 Weaknesses in how 

financial institutions identify, measure, 

monitor, and control climate-related 

financial risks could adversely affect 

financial institutions’ safety and 

soundness. The proposed OCC draft 

principles, FDIC draft principles, and 

Board draft principles (collectively, 

draft principles) were substantively 

similar and proposed a high-level 

framework for the safe and sound 

management of exposures to climaterelated financial risks, consistent with 

the risk management framework 

described in the agencies’ existing rules 

and guidance. Although all financial 

institutions, regardless of size, may have 

material exposures to climate-related 


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74184 Federal Register / Vol. 88, No. 208 / Monday, October 30, 2023 / Notices 

5The Board is responsible for the overall 

supervision and regulation of the U.S. operations of 

all foreign banking organizations. The OCC, the 

FDIC, and the state banking authorities have 

supervisory authority over the national and state 

bank subsidiaries and federal and state branches 

and agencies of foreign banking organizations, 

respectively, in addition to the Board’s supervisory 

and regulatory responsibilities over some of these 

entities. 

financial risks, the draft principles were 

intended to support key climate-related 

financial risk management efforts by the 

largest financial institutions, those with 

over $100 billion in total consolidated 

assets. 

The agencies seek to promote 

consistency in their climate-related 

financial risk management guidance. 

Accordingly, following the issuance of 

the draft principles and collective 

review of comments received on each of 

the OCC draft principles, FDIC draft 

principles, and Board draft principles, 

the agencies are now jointly issuing 

final interagency Principles for ClimateRelated Financial Risk Management for 

Large Financial Institutions (principles) 

that provide a high-level framework for 

the safe and sound management of 

exposures to climate-related financial 

risks. 

II. Discussion of Public Comments 

The OCC received nearly 100 unique 

comments on the OCC draft principles 

from individuals and organizations. 

Several of these letters were signed by 

or included individual feedback from 

multiple individuals or organizations 

(and in one case, more than 17,700 

individuals). Approximately 4,470 

individuals submitted a substantially 

similar letter directly to the OCC. 

The FDIC received more than 70 

unique comments on the FDIC draft 

principles from individuals and 

organizations. Several of the letters were 

submitted on behalf of, or signed by, 

numerous individuals and 

organizations. 

The Board received more than 100 

unique comments on the Board draft 

principles from individuals and 

organizations. Several of the letters were 

submitted on behalf of, or signed by, 

numerous individuals or organizations. 

Commenters included financial 

services trade groups, individual banks, 

environmental groups, public interest 

and advocacy groups, data and risk 

model providers, governmental 

organizations, community groups, and 

individuals, among other respondents. 

The agencies received a wide range of 

comments that both supported and 

opposed the finalization of the draft 

principles. Many commenters viewed 

the draft principles as an important step 

to support large financial institutions in 

managing climate-related financial risks. 

Other commenters asserted that 

financial institutions already effectively 

manage climate-related financial risks or 

do not face material climate-related 

financial risks. Some commenters 

expressed a view that the agencies were 

providing special treatment to climaterelated financial risks relative to other 

risks. Many commenters indicated 

practices to address climate-related 

financial risks are evolving, and they 

supported the high-level and flexible 

nature of the draft principles, while 

others encouraged the agencies to take 

additional steps to address climaterelated financial risks, including 

considering more detailed guidance. 

Most unique commenters offered 

suggestions for changes to the draft 

principles or requested additional 

guidance in specific areas. These 

comments are summarized below. 

Authority. Some commenters asserted 

that the draft principles extend beyond 

the agencies’ authority. Other 

commenters raised concerns that the 

draft principles would restrict or 

discourage provision of credit to, or 

otherwise disproportionately impact, 

certain industries, geographies, or other 

groups. Some commenters asserted that 

the draft principles could better address 

the role that they believe financial 

institutions should play in supporting 

or accelerating a transition to a lower 

carbon economy. 

The agencies are responsible for 

ensuring the safety and soundness of 

supervised financial institutions, among 

other responsibilities. Similar to other 

risks faced by financial institutions, 

climate-related financial risks can affect 

financial institutions’ safety and 

soundness. The principles are focused 

on ensuring that financial institutions 

understand and appropriately manage 

their material climate-related financial 

risks. The agencies are providing 

guidance to financial institutions 

through these principles on the 

management of climate-related financial 

risks just as the agencies provide 

guidance to financial institutions in 

identifying and managing other risks. 

The agencies did not incorporate 

suggestions for changes to the draft 

principles that extend beyond the 

agencies’ statutory mandates relating to 

safety and soundness. For example, the 

agencies did not incorporate changes in 

response to suggestions that the 

agencies promote a transition to a lower 

carbon economy. The agencies 

encourage financial institutions to take 

a risk-based approach in assessing the 

climate-related financial risks associated 

with their customer relationships and to 

take into account the financial 

institution’s ability to manage the risk. 

The principles neither prohibit nor 

discourage financial institutions from 

providing banking services to customers 

of any specific class or type, as 

permitted by law or regulation. The 

decision regarding whether to make a 

loan or to open, close, or maintain an 

account rests with the financial 

institution, so long as the financial 

institution complies with applicable 

laws and regulations. 

Scope. Some commenters supported 

draft principles that were intended for 

financial institutions with total assets 

over $100 billion. Other commenters 

proposed that the draft principles cover 

financial institutions of all sizes. Some 

requested that the draft principles be 

tailored to financial institutions based 

on the size, complexity, or risk profile 

of the financial institution. Several 

commenters noted that the agencies 

should implement a phased-in approach 

for smaller financial institutions. Other 

commenters expressed concern that the 

draft principles could unintentionally 

impact smaller financial institutions, 

including community banks, noting the 

potential burden the principles could 

impose on these smaller financial 

institutions. 

Effective risk management practices 

should be appropriate to the size of the 

financial institution and the nature, 

scope, and risk of its activities. In 

keeping with the agencies’ risk-based 

approach to supervision, the principles 

are intended for financial institutions 

with more than $100 billion in total 

consolidated assets. The principles are 

intended to provide guidance to large 

financial institutions as they develop 

strategies, deploy resources, and build 

capacity to identify, measure, monitor, 

and control for climate-related financial 

risks. 

Several commenters requested 

clarification regarding the draft 

principles’ application to foreign 

banking organizations and branches and 

agencies of foreign banks operating in 

the United States. The principles are 

intended for foreign banking 

organizations with combined United 

States operations of greater than $100 

billion. The principles also are intended 

for any branch or agency of a foreign 

banking organization that individually 

has total assets of greater than $100 

billion.5

Financial institutions’ public climate 

commitments. Several commenters 

suggested that the draft principles 

should encourage or mandate financial 

institutions to develop plans to 

transition to a lower carbon economy, to 

adopt credible commitments to align 

their portfolios with net zero 


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6See 12 CFR part 30, appendix A and appendix 

D (OCC); 12 CFR part 364, appendix A (FDIC); 12 

CFR part 208, appendix D–1 (Board); and Guidance 

on Sound Incentive Compensation Policies, 75 FR 

36396 (June 25, 2010). 

greenhouse gas emissions by 2050, or to 

directly support their customers through 

such a transition. Some commenters 

asked the agencies to hold financial 

institutions accountable if financial 

institutions’ public commitments to 

address climate change do not match 

their actions. Other commenters argued 

that the draft principles should 

recognize the aspirational nature of 

financial institutions’ public 

commitments. 

The agencies did not incorporate 

suggestions for changes to the draft 

principles that extend beyond the 

agencies’ statutory mandate relating to 

safety and soundness, including 

changes in response to suggestions that 

the agencies promote a transition to a 

lower carbon economy. Similar to the 

draft principles, the principles state that 

any financial institutions’ climaterelated strategies should align with and 

support the institution’s broader 

strategy, risk appetite, and risk 

management framework. In addition, 

when financial institutions engage in 

public communication of their climaterelated strategies, boards of directors 

and management should confirm that 

any public statements about their 

financial institutions’ climate-related 

strategies and commitments are 

consistent with their internal strategies, 

risk appetite statements, and risk 

management frameworks. This type of 

oversight is consistent with effective 

governance and risk management and 

intended to help financial institutions 

avoid legal and compliance risk. 

Low-and-moderate-income (LMI) and 

other underserved consumers and 

communities. Many commenters asked 

that the agencies acknowledge the 

potential unintended consequences of 

financial institutions’ climate risk 

management strategies on low-andmoderate-income and other underserved 

consumers and communities. Some 

commenters also requested additional 

clarification on how financial 

institutions may support communities 

that are disproportionately impacted by 

the effects of climate change, as well as 

additional guidance on how financial 

institutions can manage climate-related 

financial risks in a manner that 

minimizes adverse impacts on such 

consumers and communities. Some 

commenters also suggested that the 

principles should provide further 

guidance on how financial institutions 

can manage climate-related financial 

risks consistent with their obligations 

under fair lending and fair housing 

laws. 

The agencies recognize that both the 

effects of climate change and the actions 

that financial institutions may take to 

manage climate-related financial risks 

could potentially have a 

disproportionate impact on LMI and 

other underserved consumers and 

communities. The agencies expect 

financial institutions to manage climaterelated financial risks in a manner that 

will allow them to continue to 

prudently meet the financial services 

needs of their communities, including 

LMI and other underserved consumers 

and communities, and to ensure 

compliance with fair housing and fair 

lending laws. For example, the 

principles clarify that financial 

institutions should ensure that fair 

lending monitoring programs review 

whether and how the financial 

institution’s risk mitigation measures 

potentially discriminate against 

consumers on a prohibited basis, such 

as race, color, or national origin. 

Governance. Many commenters 

supported the flexibility provided by 

the draft principles for financial 

institutions to incorporate climaterelated financial risks within existing 

organizational structures or to establish 

new structures for climate-related 

financial risks. Many commenters 

requested that the draft principles 

further distinguish between the 

responsibilities of the boards of 

directors and of management. Some 

commenters noted that expectations that 

financial institutions consider whether 

incorporation of climate-related 

financial risks into governance and risk 

management processes may warrant 

changes to compensation policies would 

be overly prescriptive. 

The agencies have made changes to 

the draft principles to clarify the role of 

the boards of directors in overseeing the 

financial institution’s risk-taking 

activities and the role of management in 

executing the strategic plan and risk 

management framework. The agencies 

emphasize that sound compensation 

programs continue to be important to 

promote sound risk management and to 

protect the safety and soundness of 

financial institutions. As the agencies 

have existing guidelines and guidance 

on compensation,6 the principles do not 

include a specific discussion of 

compensation policies. 

Materiality of risk. Several 

commenters requested further 

clarification of how financial 

institutions should determine whether 

climate-related financial risks are 

material. Some commenters requested 

clarification that financial institutions 

have the flexibility to make their own 

materiality determinations. Some 

commenters provided specific 

recommendations for assessing 

materiality. Some commenters 

requested that the agencies distinguish 

materiality in the context of the draft 

principles from the concept of 

materiality in securities laws. Other 

commenters asserted that climaterelated financial risks are rarely or not 

material to the risk profile of financial 

institutions. 

The principles provide that financial 

institutions’ management should 

employ comprehensive processes for 

identifying climate-related financial 

risks consistent with methods used to 

identify other types of emerging and 

material risks. The agencies made 

changes to the draft principles to clarify 

that management should incorporate 

climate-related financial risks into their 

risk management frameworks where 

those risks are material. 

Coordination. Many commenters 

urged the agencies to coordinate 

amongst each other and work with other 

U.S. and international regulators and 

federal agencies to harmonize 

approaches and to share knowledge 

with respect to climate-related financial 

risks. 

The agencies agree with commenters 

that interagency coordination plays an 

important role in the effective issuance 

of guidance on climate-related financial 

risks. Accordingly, the agencies have 

jointly issued these principles and 

intend to continue to coordinate with 

other U.S. regulators and international 

counterparts, where appropriate. 

Other comments. The agencies 

received a number of detailed comments 

on other aspects of the draft principles, 

some of which were responsive to 

specific questions posed in the draft 

principles. These comments included 

responses associated with supervisory 

approaches, time horizons for 

identifying the materiality of climaterelated financial risks, relationships 

between climate-related financial risks 

and other risks, specific tools and 

resources used to manage and mitigate 

climate-related financial risks, 

approaches to scenario analysis, 

climate-related financial products 

offered by financial institutions, dataand modeling-related challenges, and 

reporting and disclosure issues. The 

responses also included feedback on 

how climate-related financial risks 

should be considered in merger and 

acquisition decisions and the challenges 


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7Some commenters also asserted that the draft 

principles were legislative rules subject to 

Administrative Procedure Act (APA) notice and 

comment requirements and that the draft principles 

violated the agencies’ rule on guidance. The 

principles are being issued as guidance and, 

consistent with the agencies’ rule on guidance, they 

will not have the force and effect of law. They do 

not establish any specific requirements applicable 

to financial institutions. Moreover, the principles 

are not subject to APA notice and comment 

requirements. 5 U.S.C. 533(b) (excluding 

interpretive rules, general statements of policy, and 

rules of agency organization, procedures, or practice 

from the notice and comment requirement). That 

the agencies sought public comment on the draft 

principles does not mean that the principles are 

intended to be a regulation or to have the force and 

effect of law. Rather, the comment process helps the 

agencies improve their understanding of the issue, 

gather information on financial institutions’ risk 

management practices, or seek ways to achieve 

supervisory objectives most effectively and with the 

least burden on financial institutions. 

8 5 CFR 1320.3(b)(2). 

9 In this issuance, the term ‘‘financial institution’’ 

or ‘‘institution’’ includes national banks, Federal 

savings associations, U.S. branches and agencies of 

foreign banks, state nonmember banks, state savings 

associations, state member banks, bank holding 

companies, savings and loan holding companies, 

intermediate holding companies, foreign banking 

organizations with respect to their U.S. operations, 

and non-bank systemically important financial 

institutions (SIFIs) supervised by the Board. 

10The Financial Stability Oversight Council has 

described the impacts of physical risks as follows: 

‘‘The intensity and frequency of extreme weather 

and climate-related disaster events are increasing 

and already imposing substantial economic costs. 

Such costs to the economy are expected to increase 

further as the cumulative impacts of past and 

ongoing global emissions continue to drive rising 

global temperatures and related climate changes, 

leading to increased climate-related risks to the 

financial system.’’ Report on Climate-Related 

Financial Risk, Financial Stability Oversight 

Council, page 10 (Oct. 21, 2021) (FSOC Climate 

Report), available at https://home.treasury.gov/ 

system/files/261/FSOC-Climate-Report.pdf. 

11The Financial Stability Oversight Council has 

described the impacts of transition risks as: ‘‘. . . 

[Changing] public policy, adoption of new 

technologies, and shifting consumer and investor 

preferences have the potential to impact the 

allocation of capital . . . . If these changes occur 

in a disorderly way owing to substantial delays in 

action or abrupt changes in policy, their impact on 

firms, market participants, individuals, and 

communities is likely to be more sudden and 

disruptive.’’ FSOC Climate Report, page 13. 

12FSOC Climate Report, page 13. 

13For further information, see Staff Reports, 

Federal Reserve Bank of New York, Understanding 

the Linkages between Climate Change and 

Inequality in the United States, No. 991 (Nov. 

2021), available at https://www.newyorkfed.org/ 

research/staff_reports/sr991.html. 

14References to the board and management 

throughout these principles should be understood 

in accordance with their respective roles and 

responsibilities and is not intended to conflict with 

existing guidance regarding the roles of board and 

management or advocate for a specific board 

structure. See, e.g., SR 21–3/CA 21–1: Supervisory 

Guidance on Board of Directors’ Effectiveness (Feb. 

26, 2021), https://www.federalreserve.gov/ 

supervisionreg/srletters/SR2103.htm; OCC 

Guidelines Establishing Heightened Standards for 

Certain Large Insured National Banks, Insured 

Federal Savings Associations, and Insured Federal 

Branches, 12 CFR part 30, appendix D. 

15The principles are intended for financial 

institutions with over $100 billion in total 

consolidated assets. With respect to foreign banking 

organizations, this includes organizations with 

combined United States operations of greater than 

$100 billion. The principles also are intended for 

any branch or agency of a foreign banking 

organization that individually has total assets of 

greater than $100 billion. 

and costs of incorporating the principles 

into risk management frameworks.7

Comments received on the draft 

principles were considered in the 

development of the principles and will 

assist the agencies as they consider 

whether and how to provide additional 

guidance in the future. 

III. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3521) (PRA) states that 

no agency may conduct or sponsor, nor 

is the respondent required to respond 

to, an information collection unless it 

displays a currently valid Office of 

Management and Budget (OMB) control 

number. 

The principles do not revise any 

existing, or create any new, information 

collections pursuant to the PRA. Rather, 

any reporting, recordkeeping, or 

disclosure activities mentioned in the 

principles are usual and customary and 

should occur in the normal course of 

business as defined in the PRA.8

Consequently, no submissions will be 

made to the OMB for review. 

IV. Principles for Climate-Related 

Financial Risk for Large Financial 

Institutions 

The financial impacts that result from 

the economic effects of climate change 

and the transition to a lower carbon 

economy pose an emerging risk to the 

safety and soundness of financial 

institutions 9 and the financial stability 

of the United States. Financial 

institutions are likely to be affected by 

both the physical risks and transition 

risks associated with climate change 

(collectively, climate-related financial 

risks). Physical risks refer to the harm to 

people and property arising from acute, 

climate-related events, such as 

hurricanes, wildfires, floods, and 

heatwaves, and chronic shifts in 

climate, including higher average 

temperatures, changes in precipitation 

patterns, sea level rise, and ocean 

acidification.10 Transition risks refer to 

stresses to institutions or sectors arising 

from the shifts in policy, consumer and 

business sentiment, or technologies 

associated with the changes that would 

be part of a transition to a lower carbon 

economy.11

Physical and transition risks 

associated with climate change could 

affect households, communities, 

businesses, and governments— 

damaging property, impeding business 

activity, affecting income, and altering 

the value of assets and liabilities. These 

risks may be propagated throughout the 

economy and financial system. As a 

result, the financial sector may 

experience credit and market risks 

associated with loss of income, defaults, 

and changes in the values of assets, 

liquidity risks associated with changing 

demand for liquidity, operational risks 

associated with disruptions to 

infrastructure or other channels, or legal 

risks.12

Weaknesses in how a financial 

institution identifies, measures, 

monitors, and controls the physical and 

transition risks associated with a 

changing climate could adversely affect 

a financial institution’s safety and 

soundness. The adverse effects of 

climate change could also include a 

potentially disproportionate impact on 

the financially vulnerable, including 

low-and-moderate-income (LMI) and 

other underserved consumers and 

communities.13

These principles provide a high-level 

framework for the safe and sound 

management of exposures to climaterelated financial risks, consistent with 

the risk management frameworks 

described in the agencies’ existing rules 

and guidance. 

The principles are intended to 

support efforts by financial institutions 

to focus on key aspects of climaterelated financial risk management. The 

principles are designed to help financial 

institutions’ boards of directors (boards) 

and management make progress toward 

incorporating climate-related financial 

risks into risk management frameworks 

in a manner consistent with safe and 

sound practices. The principles are 

intended to explain and supplement 

existing risk management standards and 

guidance on the role of boards and 

management.14

Although all financial institutions, 

regardless of size, may have material 

exposures to climate-related financial 

risks, these principles are intended for 

the largest financial institutions, those 

with over $100 billion in total 

consolidated assets.15 Effective risk 

management practices should be 

appropriate to the size of the financial 

institution and the nature, scope, and 

risk of its activities. In keeping with the 

agencies’ risk-based approach to 

supervision, the agencies anticipate that 

differences in large financial 

institutions’ complexity of operations 

and business models will result in 

different approaches to addressing 

climate-related financial risks. Some 

large financial institutions are already 


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developing governance structures, 

processes, and analytical methodologies 

to identify, measure, monitor, and 

control for these risks. The agencies 

understand that expertise in climate risk 

and the incorporation of climate-related 

financial risks into risk management 

frameworks remain under development 

in many large financial institutions and 

will continue to evolve over time. The 

agencies also recognize that the 

incorporation of material climate-related 

financial risks into various planning 

processes will be iterative, as 

measurement methodologies, models, 

and data for analyzing these risks 

continue to mature. The agencies 

encourage large financial institutions to 

take a risk-based approach in assessing 

the climate-related financial risks 

associated with individual customer 

relationships and to take into account 

the financial institution’s ability to 

manage the risk. The principles neither 

prohibit nor discourage financial 

institutions from providing banking 

services to customers of any specific 

class or type, as permitted by law or 

regulation. The decision regarding 

whether to make a loan or to open, 

close, or maintain an account rests with 

the financial institution, so long as the 

financial institution complies with 

applicable laws and regulations. 

The principles are intended to 

promote a consistent understanding of 

the effective management of climaterelated financial risks. The agencies may 

consider providing additional resources 

or guidance, as appropriate, to support 

financial institutions in prudently 

managing these risks while continuing 

to meet the financial services needs of 

their communities. 

General Principles 

Governance. An effective risk 

management framework is essential to a 

financial institution’s safe and sound 

operation. A financial institution’s 

board should understand the effects of 

climate-related financial risks on the 

financial institution in order to oversee 

management’s implementation of the 

institution’s business strategy, risk 

management, and risk appetite. The 

board should oversee the financial 

institution’s risk-taking activities, hold 

management accountable for adhering to 

the risk management framework, and 

allocate appropriate resources to 

support climate-related financial risk 

management. The board should direct 

management to provide timely, 

accurate, and well-organized 

information to permit the board to 

oversee the measurement and 

management of climate-related financial 

risks to the financial institution. The 

board should acquire sufficient 

information to understand the 

implications of climate-related financial 

risks across various scenarios and 

planning horizons, which may include 

those that extend beyond the financial 

institution’s typical strategic planning 

horizon. If weaknesses or gaps in 

climate-related financial risk 

management are identified, the 

information provided is incomplete, or 

as otherwise warranted, the board 

should challenge management’s 

assessments and recommendations. The 

board and management should support 

the stature and independence of the 

financial institution’s risk management 

and internal audit functions and, in 

their respective roles, assign 

accountability for climate-related 

financial risks within existing 

organizational structures or establish 

new structures for climate-related 

financial risks. 

Management is responsible for 

implementing the financial institution’s 

policies in accordance with the board’s 

strategic direction and for executing the 

financial institution’s overall strategic 

plan and risk management framework. 

This responsibility includes assuring 

that there is sufficient expertise to 

execute the strategic plan and 

effectively managing all risks, including 

climate-related financial risks. This also 

includes management’s responsibility to 

oversee the development and 

implementation of processes to identify, 

measure, monitor, and control climaterelated financial risks within the 

financial institution’s existing risk 

management framework. Management 

should also hold staff accountable for 

controlling risks within established 

lines of authority and responsibility. 

Management is responsible for regularly 

reporting to the board on the level and 

nature of risks to the financial 

institution, including material climaterelated financial risks. Management 

should provide the board with sufficient 

information for the board to understand 

the impacts of material climate-related 

financial risks to the financial 

institution’s risk profile and make 

sound, well-informed decisions. Where 

dedicated climate risk organizational 

structures are established by the board, 

management should clearly define these 

units’ responsibilities and interaction 

with existing governance structures. 

Policies, Procedures, and Limits. 

Management should incorporate 

material climate-related financial risks 

into policies, procedures, and limits to 

provide detailed guidance on the 

financial institution’s approach to these 

risks in line with the strategy and risk 

appetite set by the board. Policies, 

procedures, and limits should be 

modified when necessary to reflect: (i) 

the distinctive characteristics of climaterelated financial risks, such as the 

potentially longer time horizon and 

forward-looking nature of the risks; and 

(ii) changes to the financial institution’s 

operating environment or activities. 

Strategic Planning. The board should 

consider material climate-related 

financial risk exposures when setting 

and monitoring the financial 

institution’s overall business strategy, 

risk appetite, and when overseeing 

management’s implementation of 

capital plans. As part of forward-looking 

strategic planning, the board should 

consider and management should 

address the potential impact of material 

climate-related financial risk exposures 

on the financial institution’s financial 

condition, operations (including 

geographic locations), and business 

objectives over various time horizons. 

The board should encourage 

management to consider climate-related 

financial risk impacts on the financial 

institution’s other operational and legal 

risks. Additionally, the board should 

encourage management to consider the 

impact that the financial institution’s 

strategies to mitigate climate-related 

financial risks could have on LMI and 

other underserved communities and 

their access to financial products and 

services, consistent with the financial 

institution’s obligations under 

applicable consumer protection laws. 

Any climate-related strategies and 

commitments should align with and 

support the financial institution’s 

broader strategy, risk appetite, and risk 

management framework. In addition, 

where financial institutions engage in 

public communication of their climaterelated strategies, boards and 

management should assure that any 

public statements about their 

institutions’ climate-related strategies 

and commitments are consistent with 

their internal strategies, risk appetite 

statements, and risk management 

frameworks. 

Risk Management. Climate-related 

financial risks can impact financial 

institutions through a range of 

traditional risk types. Management 

should oversee the development and 

implementation of processes to identify, 

measure, monitor, and control 

exposures to climate-related financial 

risks within the financial institution’s 

existing risk management framework. 

Financial institutions with sound risk 

management employ a comprehensive 

process to identify emerging and 

material risks related to the financial 

institution’s business activities. The risk 

identification process should include 


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input from stakeholders across the 

organization with relevant expertise 

(e.g., business units, independent risk 

management, internal audit, and legal). 

Risk identification includes assessment 

of climate-related financial risks across 

a range of plausible scenarios and under 

various time horizons. 

As part of sound risk management, 

management should develop processes 

to measure and monitor material 

climate-related financial risks and to 

communicate and report the materiality 

of those risks to internal stakeholders. 

Material climate-related financial risk 

exposures should be clearly defined, 

aligned with the financial institution’s 

risk appetite, and supported by 

appropriate metrics (e.g., risk limits and 

key risk indicators) and escalation 

processes. Management should 

incorporate material climate-related 

financial risks into the financial 

institution’s risk management system, 

including internal controls and internal 

audit. 

Tools and approaches for measuring 

and monitoring exposures to climaterelated financial risks include, among 

others, exposure analysis, heat maps, 

climate risk dashboards, and scenario 

analysis. These tools can be leveraged to 

assess a financial institution’s exposure 

to both physical and transition risks in 

both the shorter and longer term. 

Outputs should inform the risk 

identification process and the short- and 

long-term financial risks to a financial 

institution’s business model from 

climate change. 

Data, Risk Measurement, and 

Reporting. Sound climate-related 

financial risk management depends on 

the availability of timely, accurate, 

consistent, complete, and relevant data. 

Management should incorporate 

climate-related financial risk 

information into the financial 

institution’s internal reporting, 

monitoring, and escalation processes to 

facilitate timely and sound decisionmaking across the financial institution. 

Effective risk data aggregation and 

reporting capabilities allow 

management to capture and report 

climate-related financial risk exposures, 

segmented or stratified by physical and 

transition risks, based upon the 

complexity and types of exposures. 

Available data, risk measurement tools, 

modeling methodologies, and reporting 

practices continue to evolve at a rapid 

pace; management should monitor these 

developments and incorporate them 

into the institution’s climate-related 

financial risk management as warranted. 

Scenario Analysis. Climate-related 

scenario analysis is emerging as an 

important approach for identifying, 

measuring, and managing climaterelated financial risks. For the purposes 

of these principles, climate-related 

scenario analysis refers to exercises 

used to conduct a forward-looking 

assessment of the potential impact on a 

financial institution of changes in the 

economy, changes in the financial 

system, or the distribution of physical 

hazards resulting from climate-related 

financial risks. These exercises differ 

from traditional stress testing exercises 

that typically assess the potential 

impacts of transitory shocks to nearterm economic and financial conditions. 

An effective climate-related scenario 

analysis framework provides a 

comprehensive and forward-looking 

perspective that financial institutions 

can apply alongside existing risk 

management practices to evaluate the 

resiliency of a financial institution’s 

strategy and risk management to the 

structural changes arising from climaterelated financial risks. 

Management should develop and 

implement climate-related scenario 

analysis frameworks in a manner 

commensurate to the financial 

institution’s size, complexity, business 

activity, and risk profile. These 

frameworks should include clearly 

defined objectives that reflect the 

financial institution’s overall climaterelated financial risk management 

strategies. These objectives could 

include, for example, exploring the 

impacts of climate-related financial 

risks on the financial institution’s 

strategy and business model, identifying 

and measuring vulnerability to relevant 

climate-related financial risk factors 

including physical and transition risks, 

and estimating climate-related 

exposures and potential losses across a 

range of scenarios, including extreme 

but plausible scenarios. A climaterelated scenario analysis framework can 

also assist management in identifying 

data and methodological limitations and 

uncertainty in climate-related financial 

risk management and informing 

management’s assessment of the 

adequacy of the institution’s climaterelated financial risk management 

framework. 

Climate-related scenario analyses 

should be subject to management 

oversight, validation, and quality 

control standards that would be 

commensurate to the financial 

institution’s risk. Climate-related 

scenario analysis results should be 

clearly and regularly communicated to 

the board and all relevant individuals 

within the financial institution, 

including an appropriate level of 

information necessary to effectively 

convey the assumptions, limitations, 

and uncertainty of results. 

Management of Risk Areas 

A risk assessment process is part of a 

sound risk management framework, and 

it allows management to identify 

emerging risks and to develop and 

implement appropriate strategies to 

mitigate those material risks. 

Management should consider and 

incorporate climate-related financial 

risks when identifying and mitigating 

all types of risk. These risk assessment 

principles describe how climate-related 

financial risks can be addressed in 

various risk categories. 

Credit Risk. Management should 

consider climate-related financial risks 

as part of the underwriting and ongoing 

monitoring of portfolios. Effective credit 

risk management practices could 

include monitoring climate-related 

credit risks through sectoral, geographic, 

and single-name concentration analyses, 

including credit risk concentrations 

stemming from physical and transition 

risks. As part of concentration risk 

analysis, management should assess 

potential changes in correlations across 

exposures or asset classes. Consistent 

with the financial institution’s risk 

appetite statement, management should 

determine credit risk tolerances and 

lending limits related to material 

climate-related financial risks. 

Liquidity Risk. Consistent with sound 

oversight and liquidity risk 

management, management should 

assess whether climate-related financial 

risks could affect its liquidity position 

and, if so, incorporate those risks into 

their liquidity risk management 

practices and liquidity buffers. 

Other Financial Risk. Management 

should monitor interest rate risk and 

other model inputs for greater volatility 

or less predictability due to climaterelated financial risks. Where 

appropriate, management should 

account for this uncertainty in their risk 

measurements and controls. 

Management should monitor how 

climate-related financial risks affect the 

financial institution’s exposure to risk 

related to changing prices. While market 

participants are still researching how 

tomeasureclimate-related price risk, 

management should use the 

bestmeasurement methodologies 

reasonably available to them and refine 

them over time. 

Operational Risk. Management should 

consider how climate-related financial 

risk exposures may adversely impact a 

financial institution’s operations, 

control environment, and operational 

resilience. Sound operational risk 

management includes incorporating an 


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Federal Register / Vol. 88, No. 208 / Monday, October 30, 2023 / Notices 74189 

assessment across all business lines and 

operations, including operations 

performed by third parties, and 

considering climate-related impacts on 

business continuity and the evolving 

legal and regulatory landscape. 

Legal and Compliance Risk. 

Management should consider how 

climate-related financial risks and risk 

mitigation measures affect the legal and 

regulatory landscape in which the 

financial institution operates. This 

should include, but is not limited to, 

taking into account possible changes to 

legal requirements for, or underwriting 

considerations related to, flood or 

disaster-related insurance, and ensuring 

that fair lending monitoring programs 

review whether and how the financial 

institution’s risk mitigation measures 

potentially discriminate against 

consumers on a prohibited basis, such 

as race, color, or national origin. 

Other Nonfinancial Risk. Consistent 

with sound oversight, the board and 

management should monitor how the 

execution of strategic decisions and the 

operating environment affect the 

financial institution’s financial 

condition and operational resilience. 

Management should also consider the 

extent to which the financial 

institution’s activities may increase the 

risk of negative financial impact and 

should implement adequate measures to 

account for these risks where material. 

Michael J. Hsu, 

Acting Comptroller of the Currency. 

By order of the Board of Governors of the 

Federal Reserve System. 

Ann E. Misback, 

Secretary of the Board. 

Federal Deposit Insurance Corporation. 

By order of the Board of Directors. 

Dated at Washington, DC, on October 24, 

2023. 

James P. Sheesley, 

Assistant Executive Secretary. 

[FR Doc. 2023–23844 Filed 10–27–23; 8:45 am] 

BILLING CODE 6210–01–P; 4810–33–P; 6714–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Disease Control and 

Prevention 

[30Day–24–23GL] 

Agency Forms Undergoing Paperwork 

Reduction Act Review 

In accordance with the Paperwork 

Reduction Act of 1995, the Centers for 

Disease Control and Prevention (CDC) 

has submitted the information 

collection request titled ‘‘National 

Wastewater Surveillance System for 

SARS–CoV–2 and Other Infectious 

Disease Targets of Public Health 

Concern’’ to the Office of Management 

and Budget (OMB) for review and 

approval. CDC previously published a 

‘‘Proposed Data Collection Submitted 

for Public Comment and 

Recommendations’’ notice on July 7, 

2023 to obtain comments from the 

public and affected agencies. CDC 

received 4,476 comments related to this 

notice. This notice serves to allow an 

additional 30 days for public and 

affected agency comments. 

CDC will accept all comments for this 

proposed information collection project. 

The Office of Management and Budget 

is particularly interested in comments 

that: 

(a) Evaluate whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the agency, including 

whether the information will have 

practical utility; 

(b) Evaluate the accuracy of the 

agencies estimate of the burden of the 

proposed collection of information, 

including the validity of the 

methodology and assumptions used; 

(c) Enhance the quality, utility, and 

clarity of the information to be 

collected; 

(d) Minimize the burden of the 

collection of information on those who 

are to respond, including, through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology, 

e.g., permitting electronic submission of 

responses; and 

(e) Assess information collection 

costs. 

To request additional information on 

the proposed project or to obtain a copy 

of the information collection plan and 

instruments, call (404) 639–7570. 

Comments and recommendations for the 

proposed information collection should 

be sent within 30 days of publication of 

this notice to www.reginfo.gov/public/ 

do/PRAMain. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Direct written 

comments and/or suggestions regarding 

the items contained in this notice to the 

Attention: CDC Desk Officer, Office of 

Management and Budget, 725 17th 

Street NW, Washington, DC 20503 or by 

fax to (202) 395–5806. Provide written 

comments within 30 days of notice 

publication. 

Proposed Project 

National Wastewater Surveillance 

System for SARS–CoV–2 and Other 

Infectious Disease Targets of Public 

Health Concern—New—National Center 

for Emerging and Zoonotic Infectious 

Diseases (NCEZID), Centers for Disease 

Control and Prevention (CDC). 

Background and Brief Description 

The Centers for Disease Control and 

Prevention (CDC) seeks to continue and 

expand existing information collection 

by the National Wastewater 

Surveillance System for COVID–19 

currently approved under the COVID– 

19 Public Health Emergency (PHE) PRA 

waiver. This information collection 

request is for three years. 

The COVID–19 pandemic 

demonstrated the need for timely, 

actionable surveillance data to inform 

disease prevention and control 

activities. The genetic material of 

SARS–CoV–2, the virus that causes 

COVID–19, is detectable in the feces of 

infected individuals, regardless of their 

symptom status. Therefore, sampling 

and testing wastewater provides a 

means to assess SARS–CoV–2 infection 

trends in the community independent of 

clinical testing or other healthcare 

indicators. This public health 

surveillance approach can be used for 

other infectious diseases or targets of 

public health concern, such as mpox, 

influenza, and antimicrobial resistance. 

The National Wastewater Surveillance 

System (NWSS) was originally 

established to support the CDC COVID– 

19 response, and now, NWSS serves as 

a public health tool to provide 

community-level disease trends. NWSS 

was designed to permit the addition or 

exchange of targets for wastewater 

infectious disease testing. This built-in 

flexibility will allow jurisdictions to 

adapt wastewater testing to changing 

public health needs, enable rapid 

responses to outbreaks or emergencies, 

and support broad capacity to detect 

future, emerging disease threats. 

Wastewater data have provided 

impactful information to local public 

health authorities to confirm trends 

observed in testing or hospitalization 

rates, and to assert the need for 

increased testing or healthcare 

resources. NWSS has supported 

jurisdictions throughout the United 

States to implement wastewater 

surveillance, and will continue to 

support state, tribal, local, and territorial 

(STLT) partners to collect wastewater 

data. Together with CDC-funded 

national-level wastewater testing by 

commercial partners, jurisdictions 

across the US have submitted data to 


khammond on DSKJM1Z7X2PROD with NOTICES