COUNCIL OF INSPECTORS GENERAL 

ON FINANCIAL OVERSIGHT

Audit of the Financial Stability 

Oversight Council’s Efforts to 

Address Climate-Related 

Financial Risk

AUGUST 2023

CIGFO-2023-001
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The Council of Inspectors General on Financial Oversight — August 2023 i 

Table of Contents

Message from the Acting Chair ......................................................... iii

Executive Summary.......................................................................... 1

Why and How We Conducted This Audit.................................................................. 1

What We Found.................................................................................................... 2

FSOC Response.................................................................................................... 3

CIGFO Working Group Audit.............................................................. 4

Background.......................................................................................................... 4

Executive Order 14030.......................................................................................... 6

Audit Approach .................................................................................................... 8

Results of Audit............................................................................... 9

FSOC’s Actions on Climate-Related Financial Risk are Consistent with the Policy, 

Objectives, and Directives Set Forth in EO 14030...................................................... 9

FSOC Implemented an Effective Process to Develop the Report on Climate-Related 

Financial Risk ....................................................................................................... 9

FSOC’s Report on Climate-Related Financial Risk Met the Requirements of EO 14030 ...11

FSOC Established Two Committees to Address Climate-Related Financial Risk .............13

Conclusion.................................................................................... 16

Appendix I: Objective, Scope, and Methodology................................. 17

Appendix II: Prior CIGFO Working Group Reports................................20

Appendix III: Results of Structured Questionnaire ...............................21

Appendix IV: FSOC Response ..........................................................25

Appendix V: CIGFO Working Group Members ....................................27

Abbreviations and Acronyms ...........................................................28
The Council of Inspectors General on Financial Oversight — August 2023 ii 

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The Council of Inspectors General on Financial Oversight — August 2023 iii 

Message from the Acting Chair

August 9, 2023

The Honorable Janet Yellen

Chair, Financial Stability Oversight Council

Washington, D.C. 20220

Dear Madam Chairwoman:

I am transmitting to you the Council of Inspectors General on Financial Oversight (CIGFO) report 

titled, Audit of the Financial Stability Oversight Council’s Efforts to Address Climate-Related 

Financial Risk. 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) authorizes 

CIGFO to convene working groups of its members to address issues within its jurisdiction. 

Accordingly, in September 2021, CIGFO voted to establish a Working Group to conduct an audit to 

assess the Financial Stability Oversight Council’s (FSOC) response to Executive Order (EO) 14030, 

Climate-Related Financial Risk, issued in May 2021.

In this resulting audit report, we conclude that FSOC’s actions were consistent with the policy, 

objectives, and directives set forth in EO 14030. Additionally, FSOC engaged with the member 

agencies to assess climate-related financial risk, and implemented an effective process to develop 

its Report on Climate-Related Financial Risk. We determined that the FSOC Report satisfactorily 

met the requirements set forth in EO 14030. Finally, FSOC established a means to facilitate 

ongoing coordination and information sharing among its member agencies on climate-related 

financial risk. While we make no recommendations in this report, we encourage FSOC, through the 

newly established Climate-Related Financial Risk Committee, to consider member agency 

suggestions and feedback to enhance the assessment and sharing of climate-related financial risk 

data and information.

I would like to take this opportunity to thank the Working Group members responsible for this 

report, each of whom is listed in Appendix V. In addition, I appreciate the support of the FSOC 

members, especially those Treasury officials who assisted with this effort.

CIGFO looks forward to working with you on this and other issues. In accordance with the DoddFrank Act, CIGFO is also providing this report to Congress.

Sincerely, 

Richard K. Delmar

Acting Chair, CIGFO
The Council of Inspectors General on Financial Oversight — August 2023 iv 

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Executive Summary

The Council of Inspectors General on Financial Oversight — August 2023 1 

Executive Summary 

Why and How We Conducted This Audit 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)1

1

 Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203,124 Stat 1376, 

(2010). 

created regulatory and resolution frameworks designed to reduce the likelihood, and 

severe economic consequences, of financial instability. The Dodd-Frank Act 

established the Financial Stability Oversight Council (FSOC or Council) and charged it 

with identifying risks to the nation’s financial stability, promoting market discipline, 

and responding to emerging threats to the stability of the U.S. financial system.2

2

 12 U.S.C. §§5321(a) and 5322(a)(1). 

It is a 

collaborative body chaired by the Secretary of the Department of the Treasury 

(Treasury) that leverages the expertise of federal financial regulators, an independent 

insurance expert appointed by the President, and state regulators. Within Treasury, a 

dedicated policy office, led by a Deputy Assistant Secretary, functions as the FSOC 

Secretariat and assists in coordinating the work of the Council among its members and 

member agencies.

3

3

 As used in this report, the terms “members” and “FSOC members” mean the individual voting and 

 nonvoting members of the FSOC. “FSOC member agencies” are the agencies and organizations that 

 these individuals represent, as applicable. This structure is described further in the Background 

 section.

The Dodd-Frank Act also created the Council of Inspectors General on Financial 

Oversight (CIGFO), whose members include the Inspectors General with oversight 

authority for the majority of FSOC’s member agencies. The Dodd-Frank Act authorizes 

CIGFO to convene a Working Group of its members to evaluate the effectiveness and 

internal operations of FSOC.4

4

 Section 989E(a)(3) of the Dodd-Frank Act. 

Appendix II provides a listing of prior CIGFO Working 

Group reports. 

In September 2021, CIGFO voted to establish a Working Group to conduct an audit to 

assess FSOC’s response to Executive Order (EO) 14030, Climate-Related Financial 

Risk, issued in May 2021.5

5

 Executive Order 14030, Climate-Related Financial Risk (May 20, 2021).

EO 14030 directed the Secretary of the Treasury to 

engage FSOC members to consider actions to assess, share, and report on climaterelated financial risk to the financial stability of the Federal Government and U.S. 

financial system.6

6

 Section 3(a)(i) of EO 14030, Climate-Related Financial Risk (May 20, 2021). 

 The Treasury Office of Inspector General (OIG) and the Federal 

 
Executive Summary

The Council of Inspectors General on Financial Oversight — August 2023 2 

Housing Finance Agency (FHFA) OIG co-led the CIGFO Working Group. Appendix V 

provides a listing of CIGFO Working Group members.

Our audit objective was to determine what actions FSOC had taken, or planned, in 

response to EO 14030, Climate-Related Financial Risk, as of August 31, 2022, and 

whether those actions were consistent with the policy, objectives, and directives set 

forth in the EO.

To accomplish our objective, we reviewed relevant legislation, FSOC’s Report on 

Climate-Related Financial Risk (Report or FSOC Report),7

7

 FSOC, Report on Climate-Related Financial Risk (October 21, 2021); 

https://home.treasury.gov/system/files/261/FSOC-Climate-Report.pdf. 

and FSOC’s internal

documentation. We interviewed FSOC Secretariat officials and developed a structured 

questionnaire to solicit feedback from FSOC member agencies to gain a better 

understanding of the effectiveness of FSOC’s processes to address climate-related 

financial risk and prepare the Report. We conducted fieldwork from February 2022 

through October 2022. Appendix I provides additional details about the objective, 

scope, and methodology of this audit.

What We Found 

We found FSOC’s actions were consistent with the policy, objectives, and directives 

set forth in EO 14030, and that FSOC engaged with the member agencies to assess 

climate-related financial risk. FSOC also implemented an effective process to develop 

its Report on Climate-Related Financial Risk, and issued it on October 21, 2021, within 

the 180 day deadline set by the EO. 

Additionally, we determined the FSOC Report satisfactorily met the requirements set 

forth in EO 14030;

8

8

 Section 3(a)(iii) of EO 14030, Climate-Related Financial Risk (May 20, 2021).

was comprehensive and addressed the President’s directives; and

completely and accurately reflected the information and input that member agencies 

provided to FSOC.

Finally, we determined that FSOC established a means to facilitate ongoing 

coordination and information sharing among its member agencies on climate-related 

financial risk. To implement recommendations in the FSOC Report, FSOC formed 

committees to address the directives set forth in EO 14030, identify priority areas for 

continued assessment and mitigation of climate-related risk to the financial system, 

 
Executive Summary

The Council of Inspectors General on Financial Oversight — August 2023 3 

and leverage the expertise of diverse stakeholders. We are not making any 

recommendations to FSOC as a result of our audit.

FSOC Response

In a written response, FSOC acknowledged the findings and conclusions reached in 

this report. FSOC also noted that they expect to build on the FSOC Report and the 

work of the new committees to continue giving appropriate focus and attention to the 

risks that climate change pose to the stability of our financial system.

See Appendix IV for the entirety of FSOC’s response to our audit report.
CIGFO Working Group Audit

The Council of Inspectors General on Financial Oversight — August 2023 4 

CIGFO Working Group Audit 

This report presents the results of the CIGFO Working Group’s audit of FSOC’s 

response to EO 14030, Climate-Related Financial Risk. CIGFO is issuing this report to 

FSOC and Congress as part of CIGFO’s responsibility to oversee FSOC under the 

Dodd-Frank Act.

Background 

The Dodd-Frank Act established FSOC to create joint accountability for identifying and 

mitigating potential threats to the stability of the nation’s financial system.9

9

 12 U.S.C. §§ 5321(a) and 5322(a)(1). 

By 

creating FSOC, Congress recognized that protecting financial stability would require 

the collective engagement of the entire financial regulatory community.

As shown in the Table on the following page, the Council consists of 10 voting 

members and 5 non-voting members and brings together the expertise of federal 

financial regulators, state regulators, an insurance expert appointed by the President, 

by and with the advice and consent of the Senate, and others.

10

10 12 U.S.C. § 5321(b). 

The voting members 

of FSOC provide a federal financial regulatory perspective as well as an independent 

insurance expert’s view. The non-voting members offer different insights as state-level 

representatives from bank, securities, and insurance regulators or as the Directors of 

offices within Treasury — the Office of Financial Research (OFR) and the Federal 

Insurance Office, established in Titles I and V of the Dodd-Frank Act, respectively.

A dedicated policy office within Treasury, led by a Deputy Assistant Secretary, 

functions as the FSOC Secretariat. The FSOC Secretariat facilitates collaboration and 

assists in coordinating the work of the Council among its members. 

 
CIGFO Working Group Audit

The Council of Inspectors General on Financial Oversight — August 2023 5 

Table - FSOC Council Membership

Federal and Independent Members State Members

Secretary of the Treasury, Chairperson (v) State Insurance Commissioner (National 

Association of Insurance Commissioners)

Chair of the Board of Governors of the Federal 

Reserve System (v) 

State Banking Supervisor (Conference of 

State Bank Supervisors)

Comptroller of the Currency (v) 

State Securities Commissioner (North 

American Securities Administrators 

Association)

Director of the Consumer Financial Protection 

Bureau (v) 

Chairman of the Securities and Exchange

Commission (v) 

Chairperson of the Federal Deposit Insurance 

Corporation (v) 

Chairman of the Commodity Futures Trading 

Commission (v) 

Director of the Federal Housing Finance Agency 

(v) 

Chairman of the National Credit Union 

Administration Board (v) 

Director of the Office of Financial Research 

Director of the Federal Insurance Office 

Independent member with insurance expertise 

(v) 

(v) Indicates Voting Member
CIGFO Working Group Audit

The Council of Inspectors General on Financial Oversight — August 2023 6 

The statutory purposes of FSOC are to:

• identify risks to the financial stability of the United States that could arise from 

the material financial distress or failure, or ongoing activities, of large, 

interconnected bank holding companies or nonbank financial companies, or that 

could arise outside the financial services marketplace;

• promote market discipline, by eliminating expectations on the part of 

shareholders, creditors, and counterparties of such companies that the 

Government will shield them from losses in the event of failure; and

• respond to emerging threats to the stability of the U.S. financial system.11

11 12 U.S.C. § 5322(a)(1). 

Among other statutory duties, FSOC is required to: 

• facilitate information sharing and coordination among the member agencies and 

other Federal and State agencies regarding domestic financial services policy 

development, rulemaking, examinations, reporting requirements, and 

enforcement actions; and 

• report annually to Congress on the activities of the Council, significant financial 

market and regulatory developments, potential emerging threats, and its 

recommendations regarding various topics.12

12 12 U.S.C. § 5322(a)(2). 

Executive Order 14030

In May 2021, the President issued EO 14030, Climate-Related Financial Risk, which 

states that the impacts of climate change present physical risks to assets, publicly 

traded securities, private investments, and companies.

13

13 Physical risk refers to the harm to people and property arising from acute, climate-related disaster 

events such as hurricanes, wildfires, and floods as well as longer-term chronic phenomena such as 

higher average temperatures.

Furthermore, a shift away 

from carbon-intensive energy sources and industrial processes presents transition risks 

to companies, communities, and workers.14

14 Transition risk refers to stresses to certain institutions or sectors arising from the shifts in policy, 

consumer and business sentiment, or technologies associated with the changes necessary to limit 

climate change.

 The EO stresses that the failure of 

 
CIGFO Working Group Audit

The Council of Inspectors General on Financial Oversight — August 2023 7 

financial institutions to account for climate-related financial risk threatens the 

competitiveness of U.S. companies and markets, negatively impacts consumers, and 

hinders the ability of financial institutions to serve their community.

EO 14030 lays out a policy intended to advance consistent, clear, intelligible, 

comparable, and accurate disclosure of climate-related financial risk, including both 

physical and transition risks. This policy is meant to mitigate climate-related financial 

risk and its drivers, while accounting for and addressing disparate impacts on 

disadvantaged communities and communities of color and spurring the creation of 

well-paying jobs. Additionally, the EO intends to achieve a target of a net-zero 

emissions economy by 2050.

Among several actions designed to further this policy, EO 14030 directs the Secretary 

of the Treasury, as the Chair of FSOC, to engage with FSOC members to consider:15

15 Section 3(a) of EO 14030, Climate-Related Financial Risk.

• assessing, in a detailed and comprehensive manner, the climate-related financial 

risk, including both physical and transition risks, to the financial stability of the 

Federal Government and the stability of the U.S. financial system;

• facilitating the sharing of climate-related financial risk data and information 

among FSOC member agencies and other executive departments and agencies 

as appropriate;

• issuing a report to the President within 180 days of the date of the EO on any 

efforts by FSOC member agencies to integrate consideration of climate-related 

financial risk in their policies and programs;

16

16 The report to the President is FSOC’s Report on Climate-Related Financial Risk (Report or FSOC 

Report).

and

• including an assessment of climate-related financial risk in FSOC’s annual report 

to Congress. 

Further, the EO specified that the FSOC Report include a discussion of:17

17 Section 3(a)(iii) of EO 14030, Climate-Related Financial Risk.

• the necessity of any actions to enhance climate-related disclosures by regulated 

entities to mitigate climate-related financial risk to the financial system or assets 

 
CIGFO Working Group Audit

The Council of Inspectors General on Financial Oversight — August 2023 8 

and a recommended implementation plan for taking those actions;

• any current approaches to incorporating the consideration of climate-related 

financial risk into the member agencies’ respective regulatory and supervisory 

activities and any impediments they faced in adopting those approaches;

• recommended processes to identify climate-related financial risk to the financial 

stability of the United States; and

• any other recommendations on how identified climate-related financial risk can 

be mitigated, including through new or revised regulatory standards as 

appropriate.

Audit Approach

Our audit objective was to determine what actions FSOC had taken, or planned, in 

response to EO 14030 as of August 31, 2022, and whether those actions were 

consistent with the policy, objectives, and directives set forth in the EO.

To accomplish our objective, we: 

• reviewed the Dodd-Frank Act and EO 14030 to gain an understanding of

FSOC’s statutory authorities and responsibilities; 

• interviewed FSOC Secretariat officials, reviewed the FSOC Report, and reviewed 

FSOC documentation to gain an understanding of actions taken by the Council 

in response to the EO; and

 

• developed a structured questionnaire to obtain member agencies’ perspectives 

on FSOC’s effectiveness in developing the Report and meeting its 

responsibilities under EO 14030. Appendix III details the results of the 

questionnaire.

We conducted fieldwork from February 2022 through October 2022. Appendix I 

provides additional details about the objective, scope, and methodology of this audit.
Results of Audit

The Council of Inspectors General on Financial Oversight — August 2023 9 

Results of Audit 

FSOC’s Actions on Climate-Related Financial Risk are Consistent 

with the Policy, Objectives, and Directives Set Forth in EO 

14030

We found FSOC’s actions were consistent with the policy, objectives, and directives 

set forth in EO 14030. Specifically, we determined that FSOC: 

• engaged its member agencies in a collaborative process to develop the FSOC 

Report; 

• issued the FSOC Report containing the elements set forth in section 3(a)(iii) of 

EO 14030 within 180 days of the date of the EO; and

• established, based on the recommendations included in the FSOC Report, two 

committees designed to assess and mitigate climate-related financial risk, 

facilitate the sharing of climate-related financial risk data and information, and 

leverage the expertise of diverse stakeholders. 

FSOC Implemented an Effective Process to Develop the Report on 

Climate-Related Financial Risk

FSOC established the Climate Working Group, a temporary, staff-level working group 

comprised of representatives from each member agency to facilitate engagement on 

climate-related financial risks and develop the Report. The Climate Working Group met 

biweekly from July 2021 through October 2021, when FSOC published the Report.

FSOC provided us with briefing materials that demonstrated discussions of a work 

plan, including the reporting timeline and report structure, and member agency 

initiatives to address climate-related financial risks. Climate Working Group meetings 

provided FSOC member agencies with opportunities for information sharing and input 

at different stages of the report preparation process. The Climate Working Group 

provided updates to the Council during the July 16, 2021 and September 9, 2021 

FSOC meetings.

Through our structured questionnaire, we gained an understanding of member 

agencies’ perspectives on FSOC’s reporting process. The results of the member 
Results of Audit

The Council of Inspectors General on Financial Oversight — August 2023 10

agency responses to the questionnaire disclose that overall: FSOC clearly 

communicated and defined the objectives of the Report to include guidance on the 

Report’s scope and format; and FSOC engaged the member agencies in developing the 

Report’s assessment of climate-related financial risk, including physical and transition 

risks.18

18 Appendix III provides the results of the structured questionnaire.

All 13 respondents to our structured questionnaire indicated that FSOC implemented 

an effective process to prepare the FSOC Report. Further, the majority of respondents 

agreed that FSOC effectively facilitated the sharing of climate-related financial risk 

data and information. However, Federal Deposit Insurance Corporation (FDIC) senior 

officials stated that while FSOC was effective in facilitating discussions about the 

types of data available and the data needs, FSOC was limited in its ability to 

effectively facilitate the sharing of actual climate-related financial risk data and results, 

because there was not much data available at that time. 

Further, FDIC OIG identified one instance in which FSOC did not disseminate a nonpublic study prepared by FDIC's Division of Insurance and Research, which was

referenced in the FSOC Report.

19

19 FDIC’s Climate Change Event Analysis was a study on the effects of climate events on local 

economic and banking conditions, including the impact on low and moderate-income areas before 

and after each climate event.

FSOC Secretariat officials acknowledged that they 

did not request the study from FDIC or share it with the other FSOC member agencies.

Further, FDIC did not offer the study to FSOC or the other member agencies. With that 

said, we reviewed Climate Working Group documentation and noted that a July 2021 

Climate Working Group meeting presentation included a summary of all agency 

initiatives pertinent to climate-related financial risk and identified FDIC research being 

conducted that related to the study referenced in the FSOC Report. We also noted that 

subsequent to the issuance of the FSOC Report in October 2021, the FDIC study was 

publicly released in June 2022.

20 

20 Federal Deposit Insurance Corporation Staff Studies, Report No. 2022-03, Severe Weather Events 

and Local Economic and Banking Conditions (June 2022); Severe Weather Events and Local 

Economic and Banking Conditions (fdic.gov).

Consistent with structured questionnaire responses indicating that FSOC implemented 

an effective process to prepare the Report, most respondents did not cite areas for 

improvement regarding FSOC’s assessment and sharing of information related to 

climate-related financial risk. FHFA officials did note, however, that the process could 

 
Results of Audit

The Council of Inspectors General on Financial Oversight — August 2023 11

be improved and that they provided FSOC with suggestions that could help with the 

sharing of data, scenario analyses, and concerns with protecting vulnerable 

communities. 

That said, FHFA, along with the independent member with insurance expertise, opined 

that the establishment of FSOC’s Climate-Related Financial Risk Committee (CFRC) 

would improve ongoing assessment of climate-related financial risk and information 

sharing.

21

21 The CFRC was established in December 2021 to support the Council in identifying climate-related 

risks, and in responding to climate-related emerging threats, to the financial system, consistent with 

the Council’s purposes and duties under the Dodd-Frank Act. 

 We encourage FSOC to consider the suggestions provided and to solicit 

feedback from all members to enhance the assessment and sharing of climate-related 

financial risk data and information.

FSOC’s Report on Climate-Related Financial Risk Met the Requirements of 

EO 14030

FSOC issued its Report on Climate-Related Financial Risk on October 21, 2021, within 

the 180 day deadline set by EO 14030.22

22 All but one FSOC (voting) member voted in favor of issuing the FSOC Report and its 

recommendations. The former FDIC Chairman abstained from the vote.

We determined that the contents of the 

FSOC Report satisfied the requirements set forth in section 3(a)(iii) of EO 14030. 

Specifically, the Report discussed:

• The need to enhance entities’ climate-related disclosures, which inform 

investors and market participants about the climate-related risks to those 

entities. The FSOC Report acknowledged that FSOC member agencies are at 

different stages in the development of disclosure requirements concerning 

regulated entities but stated that existing climate-related disclosures lack the 

consistency, comparability, and decision-usefulness for which investors have 

expressed a need. FSOC made 11 recommendations in the Report to enhance 

public climate-related disclosures.

• Approaches and actions that each member agency had undertaken to 

incorporate consideration of climate-related financial risk into its respective 

regulatory and supervisory activities. Further, the Report presented five general 

impediments that agencies face in incorporating the consideration of climaterelated financial risk into their activities. These impediments are: (1) data 

 
Results of Audit

The Council of Inspectors General on Financial Oversight — August 2023 12

limitations,23

23 Data limitations refer to the gaps in connecting the science of climate change to financial risk 

assessments and real-world economic impacts.

(2) time horizon,24

24 Time horizon refers to the fact that some impacts of climate change have already materialized, while 

others will manifest over a longer time horizon than businesses traditionally consider.

(3) complexity and uncertainty of climate risk,25

25 Complexity and uncertainty of climate risk refer to how the impacts of climate change, and 

accordingly climate-related risk, are non-linear and complex. 

(4) policy and economic uncertainty,26

26 Policy and economic uncertainty refer to instability surrounding future potential policy changes, 

which can impede progress in understanding, assessing, and managing the financial risks of climate 

change.

and (5) trade-offs.27

27 Trade-offs refer to the fact that some FSOC members may face trade-offs between climate-related 

financial risk mitigation measures and their other mandated objectives.

FSOC made nine

recommendations to build capacity and expand efforts to address climaterelated financial risk.

• Processes to identify, and assess climate-related financial risk. FSOC made six 

recommendations to fill climate-related data and methodological gaps. 

• Processes to mitigate climate-related financial risk. FSOC made nine 

recommendations regarding processes to mitigate climate-related financial risk 

to the financial stability of the United States, including recommendations to 

assess regulatory standards. 

Our structured questionnaire corroborated the quality of information contained in the 

FSOC Report. Member agency responses demonstrated that information, including the 

input and viewpoints of their agencies, was complete and accurately reflected. 

Member agencies also felt that the recommendations contained in the FSOC Report 

would be useful for their agencies. Most agencies did not have concerns regarding the 

scope, the overall data, or the conclusions reached in the Report. Although, the 

National Association of Insurance Commissioners did express a general concern with 

the degree of work and resources needed to implement some of the recommendations 

in the Report.

All respondents confirmed that they were either in the process of implementing, or 

planned to implement, the applicable recommendations in the FSOC Report. An FSOC 

Secretariat official stated that future CFRC discussions could include timeframes for 

CFRC-related activities to help advance agency actions related to the Report 

recommendations.

 
Results of Audit

The Council of Inspectors General on Financial Oversight — August 2023 13

FSOC Established Two Committees to Address Climate-Related Financial 

Risk

The Report on Climate-Related Financial Risk made two recommendations specific to 

FSOC in an effort to build capacity and expand efforts to address climate-related 

financial risks. These recommendations were for FSOC to: 

• form a new staff-level committee, the CFRC, within 60 days to identify priority 

areas for assessing and mitigating climate-related risks to the financial system 

and serve as a coordinating body, where appropriate, to share information, 

facilitate the development of common approaches and standards, and facilitate 

communication across FSOC members and interested parties;

28

28 FSOC, Report on Climate-Related Financial Risk (May 20, 2021), Recommendation 1.1, p. 5. 

and

• form a Climate-Related Financial Risk Advisory Committee (CFRAC). This 

advisory committee, reporting to the CFRC, will help the Council gather 

information on and analysis of climate-related financial risks from a broad array 

of stakeholders.29

29 FSOC, Report on Climate-Related Financial Risk (May 20, 2021), Recommendation 1.2, p. 5. 

The Climate-Related Financial Risk Committee (CFRC) 

FSOC approved the establishment of the CFRC in December 2021,

30

30 FSOC Meeting Minutes (December 2021); 

https://home.treasury.gov/system/files/261/December_17_2021.pdf. 

within the 60 day 

timeframe stipulated in the FSOC Report. It issued a charter for the CFRC,31

31 The Council’s Committee Charters; 

https://home.treasury.gov/system/files/261/The_Councils_Committee_Charters_2021-12-17.pdf. 

detailing 

its purpose, duties, and oversight responsibilities. Per its charter, the CFRC’s duties 

include identifying priority areas for assessing and mitigating climate-related financial 

risk to the financial system and facilitating information sharing and coordination among 

staff of member agencies relating to climate-related risks to the financial system.

The CFRC charter also allows the CFRC to create working groups, as appropriate, 

composed of staff of member agencies to perform specific functions of the CFRC, and 

any such working group is subject to the direction and oversight of the CFRC and 

 
Results of Audit

The Council of Inspectors General on Financial Oversight — August 2023 14

Deputies Committee.32

32 The Deputies Committee coordinates and oversees the work of the interagency staff committees and 

is made up of a senior official from each FSOC member agency.

As of August 2022, the CFRC established four working groups. 

The working groups and the objectives of each are: 

• Data Requirements – to build an inventory of data that is of interest to each 

FSOC member agency for climate-related financial risk analysis and to identify 

data gaps.

• Data Infrastructure – to facilitate the establishment of new infrastructure for 

FSOC member agencies to find, obtain, share, and analyze data on climaterelated financial risk, including coordination with OFR on its pilot centralized, 

cloud based data and analytics hub to support FSOC in researching climaterelated financial risk.

• Risk Assessments – to develop a more robust framework around identifying and 

prioritizing risks and vulnerabilities, building from best practices.

• Scenario Analysis – to share information among member agencies and facilitate 

common approaches to climate scenario analysis. This scenario analysis relates 

to the exposure of regulated entities to climate-related risks and how those risks 

translate into economic and financial impacts.

We found that the CFRC held regular meetings beginning February 2022 through 

August 2022.

33

33 Records we reviewed showed meetings were held in February, March, June, and August of 2022. 

We reviewed meeting records and work plans and found that each of 

the CFRC’s working groups had developed work streams, established milestones, and 

defined deliverables related to their objectives. The working groups also provided 

progress updates to the CFRC toward meeting their objectives. CFRC meeting

materials also contain a standing agenda item for member agencies to provide short 

updates on their respective priorities for any climate-related work, any significant 

developments since the publication of the FSOC Report, and how the CFRC can help 

support member agency initiatives. 

The CFRC charter requires updates to the Council at least twice a year on the status 

of efforts by Council members and member agencies to identify and address climaterelated financial risks. In response to this requirement, the CFRC reported on its efforts 

at the July 2022 FSOC meeting, sharing that OFR had launched its Climate Data and 

 
Results of Audit

The Council of Inspectors General on Financial Oversight — August 2023 15

Analytics Hub with the Federal Reserve, among other activities.

34

34 FSOC Meeting Minutes (July 2022); 

https://home.treasury.gov/system/files/256/FSOC_20220728_Minutes.pdf. 

Additionally, the 

FSOC Report recommended that the FSOC annual report detail the CFRC’s progress in 

addressing climate-related financial risks.

The Climate-Related Financial Risk Advisory Committee (CFRAC) 

FSOC approved the establishment of the CFRAC in October 2022 and issued a charter 

for the committee detailing its purpose, duties, and oversight responsibilities. The 

CFRAC, to be composed of up to 30 members, will meet at least twice a year and 

report to the CFRC. It is intended to leverage the expertise of diverse stakeholders; 

including climate science experts, non-governmental research institutions, academia, 

commercial businesses, the financial services industry, and special government 

employees. The climate data and analytical expertise of CFRAC members will support 

regulators’ efforts to translate climate-related risks into economic and financial 

impacts.

Because the establishment of the CFRAC was outside of our audit scope, we did not 

review the actions and plans of this committee.

 
Conclusion

The Council of Inspectors General on Financial Oversight — August 2023 16

Conclusion

We found FSOC’s actions were consistent with the policy, objectives, and directives 

set forth in EO 14030, and FSOC engaged with the member agencies to assess 

climate-related financial risk. FSOC also implemented an effective process to develop 

its Report on Climate-Related Financial Risk. 

Additionally, we determined the FSOC Report satisfactorily met the requirements set 

forth in EO 14030; was comprehensive and addressed the President’s directives; and

completely and accurately reflected the information and input provided to FSOC by its 

member agencies. 

Finally, we determined that, subsequent to report issuance, FSOC established a means 

to facilitate ongoing coordination and information sharing among its member agencies

on climate-related financial risk. FSOC formed committees to address the directives set 

forth in EO 14030, identify priority areas for continued assessment and mitigation of 

climate-related risk to the financial system, and leverage the expertise of diverse 

stakeholders.

FSOC incorporated into the CFRC charter an explicit duty for the CFRC to “facilitate 

information sharing and coordination among staff of Council members and member 

agencies relating to climate-related risks to the financial system.” Certain responses to 

our structured questionnaire indicate that member agencies have suggestions on how 

to improve this information sharing. While we make no recommendations in this 

report, we encourage FSOC, through the CFRC, to consider member agency

suggestions and feedback to enhance the assessment and sharing of climate-related 

financial risk data and information.

 

FSOC Response

In a written response, FSOC acknowledged the findings and conclusions reached in 

this report. FSOC also noted that they expect to build on the FSOC Report and the 

work of the new committees to continue giving appropriate focus and attention to the 

risks that climate change pose to the stability of our financial system.
Appendix I

The Council of Inspectors General on Financial Oversight — August 2023 17

Appendix I: Objective, Scope, and Methodology 

Objective

Our audit objective was to determine what actions the Financial Stability Oversight 

Council (FSOC or Council) had taken, or planned, in response to Executive Order (EO) 

14030, Climate-Related Financial Risk, as of August 31, 2022, and whether those 

actions were consistent with the policy, objectives, and directives set forth in the EO.

Scope and Methodology 

The scope of this audit included FSOC’s actions and planned initiatives in response to 

EO 14030, Climate-Related Financial Risk, as of August 31, 2022.

The Council of Inspectors General on Financial Oversight (CIGFO) convened a Working 

Group to review FSOC’s response to EO 14030 and assess whether those actions 

were consistent with the policy, objectives, and directives set forth in the EO. The 

Working Group was co-led by the Department of the Treasury (Treasury) Office of 

Inspector General and the Federal Housing Finance Agency Office of Inspector 

General. We conducted fieldwork from February 2022 through October 2022.

To accomplish our audit objective, we:

• reviewed the Dodd-Frank Wall Street Reform and Consumer Protection Act and 

EO 14030 to determine FSOC’s statutory authorities and duties;

• interviewed FSOC Secretariat officials to gain an understanding of FSOC’s 

governance and committee structure, processes for coordination and 

information sharing among FSOC member agencies, and process developed for 

issuing the Report on Climate-Related Financial Risk (Report or FSOC Report); 

• reviewed the FSOC Report to determine whether it met the requirements of EO 

14030; 

• reviewed FSOC’s internal documents, annual reports, and Council meeting 

minutes,

35

35 FSOC members are required by the Dodd-Frank Wall Street Reform and Consumer Protection Act to 

meet no less than quarterly, but the Council has historically convened on a more frequent basis. 

12 U.S.C. § 5321(e)(1). 

to determine whether FSOC developed plans, methodologies, 

 
Appendix I

The Council of Inspectors General on Financial Oversight — August 2023 18

milestones, and deliverables needed to define and guide its work to identify and 

address climate-related financial risk; 

• created a structured questionnaire designed to obtain FSOC member agencies’ 

and the independent member’s perspectives on the process FSOC implemented 

to develop the Report and the accuracy and completeness of information 

contained in the Report. This questionnaire was used by each of the CIGFO 

Working Group members to facilitate the consistent collection of information 

from the FSOC member agencies. In addition to obtaining responses from FSOC 

members, CIGFO Working Group members performed additional procedures as 

necessary to substantiate FSOC member agency responses. We received 

responses from 13 of the 15 FSOC members;36

36 Questionnaire responses were not obtained from the Secretary of the Treasury or the Conference of 

State Bank Supervisors (CSBS). CSBS was unable to respond to the questionnaire, because the 

individuals working at CSBS during our audit did not have a role in the FSOC Report.

and 

• obtained the statuses of actions taken by FSOC member agencies in response 

to the recommendations in the FSOC Report, including any planned actions. 

CIGFO Working Group members obtained FSOC member responses to the structured 

questionnaire and statuses of actions taken, and planned, in response to the Report 

recommendations. CIGFO Working Group members had discretion to obtain the 

information through meetings or receipt of written responses to the structured 

questionnaire.

We assessed internal control necessary to satisfy our audit objective. In particular, we 

identified the following U.S. Government Accountability Office’s Standards for Internal 

Control in the Federal Government components and principles as significant to our 

objective: 37

37 U.S. Government Accountability Office, Standards for Internal Control in the Federal Government

(Sep. 2014). 

1) control environment and the underlying principle - Establish Structure, 

Responsibility, and Authority, 2) risk assessment and the underlying principle - Define 

Objectives and Risk Tolerances, and 3) information and communication and the 

underlying principle - Use Quality Information. Because our review was limited to these 

aspects of internal control, it may not have disclosed all internal control deficiencies 

that may have existed at the time of this audit. 

We conducted this performance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform the 

 
Appendix I

The Council of Inspectors General on Financial Oversight — August 2023 19

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objective. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our 

audit objective. 
Appendix II

The Council of Inspectors General on Financial Oversight — August 2023 20

Appendix II: Prior CIGFO Working Group Reports 

The Council of Inspectors General on Financial Oversight has issued the following 

working group reports:

• Audit of the Financial Stability Oversight Council’s Controls over Non-public 

Information, June 2012

• Audit of the Financial Stability Oversight Council’s Designation of Financial 

Market Utilities, July 2013

• Audit of the Financial Stability Oversight Council’s Compliance with Its 

Transparency Policy, July 2014

• Audit of the Financial Stability Oversight Council’s Monitoring of Interest 

Rate Risk to the Financial System, July 2015

• Audit of the Financial Stability Oversight Council’s Efforts to Promote 

Market Discipline, February 2017

• CIGFO’s Corrective Verification Action on the Audit of the Financial 

Stability Oversight Council’s Designation of Financial Market Utilities, May 

2017

• Top Management and Performance Challenges Facing Financial Regulatory 

Organizations, September 2018

• Audit of the Financial Stability Oversight Council’s Monitoring of 

International Financial Regulatory Proposals and Developments, May 2019

• Top Management and Performance Challenges Facing Financial-Sector 

Regulatory Organizations, July 2019

• Survey of FSOC and its Federal Member Agencies’ Efforts to Implement 

the Cybersecurity Act of 2015, January 2020

• CIGFO Guidance in Preparing for and Managing Crises, June 2022
Appendix III

The Council of Inspectors General on Financial Oversight — August 2023 21

Appendix III: Results of Structured Questionnaire

We developed a structured questionnaire to obtain responses from Financial Stability 

Oversight Council (FSOC) members to assist us in determining whether FSOC 

implemented an effective process to develop the Report on Climate-Related Financial 

Risk (Report or FSOC Report) and respond to the requirements set forth in Executive 

Order (EO) 14030, Climate-Related Financial Risk. 

The Council of Inspectors General on Financial Oversight Working Group members

obtained FSOC member agency responses through interviews or requesting written 

responses to the questionnaire. FSOC member agencies answered “Yes”, “No” or “Not 

Applicable” to each question and provided a description or explanation of their 

response. As detailed in Appendix I, we received responses from 13 of the 15 FSOC 

members. 

Question 1 - Did FSOC clearly communicate and define the objectives of the Report

and provide your agency with guidance on the scope and format of the Report? 

All 13 respondents confirmed that FSOC clearly communicated and defined the 

objectives of the Report as well as provided guidance on the scope and format of 

the Report. Per the responses, FSOC held various meetings regarding the content 

of the Report and agencies had the opportunity to provide feedback.

Question 2 - Did FSOC engage your agency in developing the Report’s assessment of 

climate-related financial risk, including both physical and transition risks? How?

All 13 respondents affirmed that FSOC engaged their agency in developing the 

Report’s assessment of climate-related financial risk. Multiple agencies commented 

that FSOC held one-on-one meetings with their agencies, and they were given 

many opportunities to contribute to, and comment on, the draft report.

Question 3 - Did FSOC effectively facilitate the sharing of climate-related financial risk 

data and information among the FSOC member agencies when preparing the Report? 

How?

According to 11 of the 13 respondents, FSOC effectively facilitated the sharing of 

climate-related financial risk data and information among the FSOC member 

agencies when preparing the Report. Commenters stated that FSOC accomplished 
Appendix III

The Council of Inspectors General on Financial Oversight — August 2023 22

this through the regular distribution of the draft report language, including sources, 

at frequent intervals.

However, the National Association of Insurance Commissioners (NAIC) responded 

“No” to this question and commented that sharing climate data was not necessary 

during the drafting of the Report. NAIC explained that the Report helped identify 

relevant data, but the type of sharing necessary to coordinate across the agencies 

was a recommendation of the Report, not a prerequisite of drafting the Report.

Additionally, Federal Deposit Insurance Corporation (FDIC) senior officials stated

that while FSOC was effective in facilitating discussions about the types of data 

available and the data needs, it was limited in its ability to effectively facilitate the 

sharing of actual climate-related financial risk data and results, because there was 

not much data available at that time. 

Further, FDIC Office of Inspector General identified one instance in which FSOC did 

not disseminate a non-public study prepared by FDIC's Division of Insurance and 

Research, which was referenced in the FSOC Report. 

Question 4 - Has your agency identified any areas in which FSOC’s assessment and 

sharing of information regarding climate-related financial risk can be improved?

Two respondents identified areas in which FSOC’s assessment and sharing of 

information regarding climate-related financial risk could be potentially improved.

Federal Housing Finance Agency (FHFA) officials stated that they provided FSOC 

with suggestions that would help with the sharing of data, scenario analyses, and 

concerns with protecting vulnerable communities. FHFA officials explained that 

scenario analysis regarding climate risk was a new field, and translating climate 

changes into economic variables was a new concept.

Both FHFA and the independent member with insurance expertise communicated 

that they believe that the Climate-Related Financial Risk Committee could help to 

improve the assessment and sharing of climate-related risk information.

Although the Office of the Comptroller of the Currency did not identify any areas 

for improvement, it commented that FSOC is getting more responsibility in the 

climate area, and it would be helpful if FSOC had more staff to work on this area.
Appendix III

The Council of Inspectors General on Financial Oversight — August 2023 23

Question 5 - Was the input and/or viewpoints of your agency accurately reflected in 

the Report?

All 13 respondents stated that their input and/or viewpoints were accurately 

reflected in the Report.

Question 6 - Was your agency provided a draft of the Report for review and comment?

All 13 respondents stated they had opportunities to review and comment on draft 

versions of the Report.

Question 7 - Were the concerns of your agency satisfactorily addressed during the 

report preparation process?

Twelve (12) of the 13 respondents stated that the concerns of their agencies were 

satisfactorily addressed during the report preparation process. 

The Board of Governors of the Federal Reserve System responded to this question 

with “Not Applicable,” and stated that they were not aware of any concerns 

expressed aside from the normal comments made in the drafting process.

Question 8 - Did the information specific to your agency in the Report completely and 

accurately reflect the information that your agency provided?

All 13 respondents stated that the information specific to their agency in the 

Report completely and accurately reflected the information that their agency 

provided.

Question 9 - Does your agency have any concerns regarding the scope of the Report, 

the overall data contained within the Report, or the conclusions reached in the Report?

Twelve (12) of the 13 respondents did not have any concerns regarding the scope 

of the Report, the overall data contained within the Report, or the conclusions 

reached in the Report.

NAIC expressed concerns with the conclusions and recommendations in the 

Report. NAIC stated that the degree of data gathering and sharing necessary to 

conduct scenario analysis or stress testing, particularly for insurance liabilities, 

could be extensive. NAIC said that staffing and resources to perform some of the 

work identified in the Report would be a challenge.
Appendix III

The Council of Inspectors General on Financial Oversight — August 2023 24

Question 10 - Are the recommendations contained in the FSOC Report useful for your 

agency? Did FSOC consider your agency’s input regarding the recommendations?

All 13 respondents acknowledged that the Report recommendations were useful to 

their agency and that FSOC considered their agencies’ input when developing the 

Report recommendations. 

Question 11 - Has your agency begun to address the Report recommendations? Please 

summarize your agency’s plans for implementing the recommendations contained in 

the Report. 

All 13 respondents indicated that their agencies had begun to address the Report 

recommendations and provided written summaries to us of their planned initiatives 

to address the recommendations. 

Question 12 - Overall, did FSOC implement an effective process to prepare the FSOC 

Report?

All 13 respondents indicated that FSOC implemented an effective process to 

prepare the FSOC Report. Various agencies acknowledged the short timeframe 

FSOC was given to produce the Report, and each agency stated that it felt that the 

FSOC had an effective process.

Status of Actions Taken to Address Report Recommendations 

As of May 2022, all FSOC member agencies were in the process of implementing 

or planned to implement all Report recommendations that were applicable to their

agency. 
Appendix IV

The Council of Inspectors General on Financial Oversight — August 2023 25

Appendix IV: FSOC Response
Appendix IV

The Council of Inspectors General on Financial Oversight — August 2023 26
Appendix V

The Council of Inspectors General on Financial Oversight — August 2023 27

Appendix V: CIGFO Working Group Members

Department of the Treasury Office of Inspector General , Co-Lead

Richard Delmar, Acting Inspector General, Department of the Treasury and Acting CIGFO Chair

Deborah Harker Susan Barron Jeffrey Hawkins

Anne Halamar Katherine Draper Andrew Morgan

Tayla Haughton Jackquelynne Foley Michael Kelly

Aziza Harvey-Johnson Jenny Hu Yves Laison

Federal Housing Finance Agency Office of Inspector General, Co-Lead

Brian Tomney, Inspector General, Federal Housing Finance Agency

James Hodge Abdil Salah James Lisle

April Ellison Christopher Mattocks

Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau 

Office of Inspector General

Mark Bialek, Inspector General, Board of Governors of the Federal Reserve System and Consumer 

Financial Protection Bureau

Michael VanHuysen Jason Derr Cynthia Gray

Laura Shakarji Jennifer Ksanznak Rasheem Walker-Gillis

Department of Housing and Urban Development Office of Inspector General

Rae Oliver Davis, Inspector General, Department of Housing and Urban Development

Kilah White Christopher Fontanesi Caitlin Clark

Frances Ranzie Mike Zaccaria

Federal Deposit Insurance Corporation Office of Inspector General

Tyler Smith , Acting Inspector General, Federal Deposit Insurance Corporation

Terry Gibson Cynthia Hogue Luke Itnyre

Melissa Mulhollen Wendy Alvarado Abby Woods

National Credit Union Administration Office of Inspector General

James Hagen, Inspector General, National Credit Union Administration

Marvin Stith

Special Inspector General for the Troubled Asset Relief Program

Melissa Bruce, Acting Special Inspector General, Troubled Asset Relief Program

Yusuf House

U.S. Commodity Futures Trading Commission Office of Inspector General

Dr. Brett M. Baker, Acting Inspector General, U.S. Commodity Futures Trading Commission

Branco Garcia

U.S. Securities and Exchange Commission Office of Inspector General

Deborah J. Jeffrey, Inspector General, U.S. Securities and Exchange Commission

Rebecca Sharek Colin Heffernan Kelli Brown-Barnes
Abbreviations and Acronyms

The Council of Inspectors General on Financial Oversight — August 2023 28

Abbreviations and Acronyms

Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act

CFRAC Climate-Related Financial Risk Advisory Committee

CFRC Climate-Related Financial Risk Committee 

CIGFO Council of Inspectors General on Financial Oversight

Council Financial Stability Oversight Council

CSBS Conference of State Bank Supervisors

EO Executive Order

FDIC Federal Deposit Insurance Corporation

FHFA Federal Housing Finance Agency

FSOC Financial Stability Oversight Council

FSOC Report Report on Climate-Related Financial Risks

Member Agencies FSOC Member Agencies

Members FSOC Members 

NAIC National Association of Insurance Commissioners

OIG Office of Inspector General

Report Report on Climate-Related Financial Risks

Treasury Department of the Treasury
The Council of Inspectors General on Financial Oversight — August 2023 29