OCC Solicits Academic Papers and Research on the Impact of Banking on Climate Risk
On December 3, 2021, the Office of the Comptroller of the Currency (OCC) issued a news release soliciting academic-focused papers and policy-focused research on the impact of banking on climate risk to be presented to the OCC on June 6-7, 2022.
The OCC intends to select between 6 and 10 papers to present at the June meeting, with a discussion to follow. The provided—non-exhaustive—“areas of interest” that the OCC requests presentation over include the following:
physical risks directly arising from climate change;
transition risks from climate policies, technological innovation, consumer sentiment, or investor sentiment;
differential community impact;
climate risk modeling and stress testing; and
environmental, social, and corporate governance ratings and regulatory reliance.
The deadline for submission of a paper or a one-page extended abstract or executive summary is March 11, 2022, with all submissions being directed to EconClimateRiskSymposium@occ.treas.gov
Although the OCC is only currently engaging in academic discussions surrounding this issue, recent statements by the Acting Comptroller of the Currency, Michael J. Hsu, indicates that this is merely the first step toward their goal of "prioritize[ing] the need to incorporate climate change into risk management frameworks to address the safety and soundness of the federal banking system.”
Additionally, financial institutions should note these efforts at all levels, although the Acting Comptroller is only addressing his plan for large banks at the time. Hsu stated, "we will continue to accelerate our response to the potential safety and soundness impacts of climate risk, consistent with the goals of the Paris Agreement and U.N. Framework Convention on Climate Change (COP 26).” As discussed HERE, COP 26 has implications for “every company, every financial firm, every bank, insurer and investor.”
If you have questions or concerns about how these legislative efforts could impact your financial institution, contact Kennedy Sutherland.