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Climate Risk Scorecard

Assessment Key
Notable ProgressNotable Progress
Some ProgressSome Progress
No ProgressNo Progress
Not ApplicableNot Applicable

Notable Progress

Reasoning

For more information about our key findings and learnings, please download the 2024 Climate Risk Scorecard report.

Notable Progress

Reasoning

For more information about our key findings and learnings, please download the 2024 Climate Risk Scorecard report.

Methodology

We assessed the extent to which the agency has expanded and established sustainable, well-resourced capacity “to define, identify, measure, monitor, assess, and report on climate-related financial risks and their effects on financial stability.” (FSOC 1.3). 

This includes investments in staffing, appointing senior staff, forming internal working groups and/or committees, staff training, investments in technological and analytical capabilities, and financial resources provided to staff working on these issues. 

Some Progress

Reasoning

For more information about our key findings and learnings, please download the 2024 Climate Risk Scorecard report.

Methodology

We assessed the extent to which the agencies have made information and data available to the public. 

  • “[I]nclude descriptions of their activities related to climate-related financial risks in their annual reports and consider incorporating climate-related financial risks in relevant risk reports that they publish, as appropriate ... [and] within the context of each member’s mandate and authority.” (FSOC 1.4). 

  • “[M]ake climate-related data for which they are the custodians freely available to the public, as appropriate and subject to any applicable data confidentiality requirements.” (FSOC 1.5). 

Notable Progress

Reasoning

For more information about our key findings and learnings, please download the 2024 Climate Risk Scorecard report.

Methodology

We assessed the extent to which the agency - consistent with its mandate and authorities and its membership in the Financial Literacy and Education Commission (FLEC) - has assessed and made progress on addressing climate risks to financially vulnerable communities.  

  • “[C]oordinate the analyses of climate-related financial risks ... with their efforts to understand impacts on communities and households. FSOC members should, as applicable, integrate these analyses into the[ir annual] public reports.” (FSOC 1.6). 

  • “[E]valuate climate-related impacts and the impacts of proposed policy solutions on financially vulnerable populations when assessing the impact of climate change on the economy and the financial system.” (FSOC 1.8).  

  • “[FLEC members should] analyze and understand the impact of climate change on the financial well-being of financially vulnerable populations. FSOC members that are also FLEC members should actively participate in this analysis.” FLEC members include the Fed, OCC, FDIC, NCUA, SEC, CFTC, and FHFA. (FSOC 1.9).  

Notable Progress

Reasoning

For more information about our key findings and learnings, please download the 2024 Climate Risk Scorecard report.

Methodology

We assessed the extent to which the agencies have advanced research and data collection on climate risk.  

  • “Identify[] the data needed to evaluate the climate-related financial risk exposures of regulated entities and financial markets.” (FSOC 2.1).   

  • “Perform[] an internal inventory of currently collected and procured data and its relevance for climate risk assessments." (FSOC 2.1).   

  • “Develop[] a plan for procuring necessary data through data collection, data sharing arrangements and information purchased from data providers or other sources.” (FSOC 2.1).   

  • “[F]acilitate the sharing of climate-related data across FSOC members and non-FSOC member agencies to assess climate-related financial risk, consistent with data confidentiality requirements.” (FSOC 2.2)    

  • “[D]evelop consistent data standards, definitions, and relevant metrics ... to facilitate common definitions of climate-related data terms, sharing of data, and analysis and aggregation of data.” (FSOC 2.5) 

Some Progress

Reasoning

For more information about our key findings and learnings, please download the 2024 Climate Risk Scorecard report.

Methodology

We assessed the extent to which the agencies have begun to assess, develop, and conduct climate scenario analyses at their supervised entities.  

  • “[C]ollaborate with external experts to identify climate forecasts, scenarios, and other tools necessary to better understand the exposure of regulated entities to climate-related risks and how those risks translate into economic and financial impacts.” (FSOC 4.1). 

  • “[U]se scenario analysis, where appropriate, as a tool for assessing climate-related financial risks, taking into account their supervisory and regulatory mandates and the size, complexity, and activities of regulated entities.” (FSOC 4.3). 

  • “[C]onsider using common scenarios that build on existing work, including scenarios developed by NGFS and work at the FSB, as appropriate for the institutions and markets under consideration.” (FSOC 4.4). 

No Progress

Reasoning

For more information about our key findings and learnings, please download the 2024 Climate Risk Scorecard report.

Methodology

We assessed the extent to which the agency has enhanced public reporting requirements for their regulated entities. The market is currently mispricing climate risk. The lack of consistent disclosure by entities supervised by U.S. financial regulators is an obstacle to market efficiency and to the accurate pricing of climate risk.  

  • “[R]eview their existing public disclosure requirements and consider, as appropriate, updating them to promote the consistency, comparability, and decision-usefulness of information on climate-related risks and opportunities.” (FSOC 3.1). 

  • “[C]onsider enhancing public reporting requirements for climate related risks in a manner that builds on the four core elements of the TCFD.” (FSOC 3.2). 

  • “[C]onsider whether such disclosures should include disclosure of GHG emissions.” (FSOC 3.4). 

  • “[R]eview banks’ public regulatory reporting requirements to assess whether enhancements are needed to provide market participants with information on institutions’ climate-related financial risks, taking into account a bank’s size, complexity, and activities.” (FSOC 3.7). 

Notable Progress

Reasoning

For more information about our key findings and learnings, please download the 2024 Climate Risk Scorecard report.

Methodology

We assessed the extent to which the agencies have enhanced supervisory scrutiny of climate risk management at their supervised entities to ensure their resilience and the resilience of our financial system.                 

  • “[C]larif[y] or enhanced risk management expectations ... [and] guidance.” (FSOC 4.8). 

  • “[R]eview[] regulated entities’ efforts to address climate-related risks." (FSOC 4.6).

  • “[R]eview[] existing ... guidance ... to identify where clarifications and enhancements are needed.” (FSOC 4.7). 

Some Progress

Reasoning

For more information about our key findings and learnings, please download the 2024 Climate Risk Scorecard report.

Methodology

We assessed the extent to which the agencies have incorporated climate risk management expectations into their regulatory requirements for supervised entities to ensure their resilience and the resilience of our financial system.

  • “[C]larif[y] or enhanced risk management ... requirements.” (FSOC 4.8). 

  • “[R]eview[] existing regulations ... and regulatory reporting to identify where clarifications and enhancements are needed.” (FSOC 4.7). 

Other Agency Scorecards:
About the Federal Reserve System

The Federal Reserve System (Federal Reserve or Fed) is the central bank of the United States and one of the largest central banks in the global financial system. The Fed is comprised of the Board of Governors and 12 regional banks, which are the operating arms of the Federal Reserve System. Each reserve bank operates within its own geographic area of the U.S., gathering data and other information about the businesses and the needs of local communities. That information is then factored into policy decisions by the Federal Open Market Committee (FOMC), which sets national monetary policy and makes all decisions regarding the conduct of open market operations, and the Federal Reserve’s Board of Governors, which oversees the reserve banks and ensures the Fed fulfills its statutory responsibilities. 

The Fed’s mission is to foster the stability, integrity, and efficiency of the nation’s monetary and financial systems, in order to maximize economic performance. It sets U.S. monetary policy, supervises and regulates financial institutions, monitors financial system risks, and promotes consumer protection. Of particular importance, it supervises bank holding companies and other key financial institutions. The Fed’s potential impact on risk response, management, and mitigation is enormous. Its response to the coronavirus pandemic, to use a current example, underscores the scope and scale of its potential to impact every aspect of the U.S. financial system.  

The Fed is responsible for ensuring that supervised financial institutions are resilient to all material risks, both macroprudential and microprudential. Climate risk – and its associated economic and financial market consequences – directly and indirectly impacts bank balance sheets, strategies, and operations, and could increase credit, market, liquidity, and operational risk at financial institutions. Because this will implicate the safety and soundness of both individual firms and the financial system as a whole, the Fed must understand and address these risks.

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