NEW YORK (WWTI) — The Department of Financial Services is working to manage financial risks from climate change.
New York State Department of Financial Services Superintendent Linda A. Lacewell announced on Thursday that the Department is broadening efforts to ensure that all regulated entities manage climate change financial risks. The Department outlined its expectations to address climate risks in a letter addressed to all entities.
The letter was sent to all New York-regulated banking organizations, mortgage servicers, trust companies, and “non-depositories” including money transmitters, licensed lenders, sales finance companies, premium finance agencies, and virtual currency companies.
“Climate change is happening now, and we have to take steps to manage the financial risks now,” said Superintendent Lacewell. “We want to ensure that every institution is managing its own individual risks from climate change, which is critical for the safety and soundness of the financial services industry. By working with the industry and engaging in a dialogue on this serious issue, we are creating a roadmap for a more sustainable future.”
For regulated organizations, the DFS stated that financial risks from climate change must be integrated into governance frameworks, risk management processes, and business strategies.
Regulated non-depositories will be expected to conduct a risk assessment of the physical and transition risks of climate change, whether directly impacting them, or indirectly due to the disruptive consequences of climate change in the communities they serve and on their customers.
Additionally, regulated non-depositories will have to develop strategic plans to help mitigate these risks.
The Department is also developing strategies for integrating climate-related risks into their supervisory mandate.