Pub. 12 2021 Issue 4

Pub. 12 2021 I Issue 4 Winter 23 West Virginia Banker • Issuing requirements for climate-related disclosures and considering whether those disclosures should require information related to greenhouse gas emissions. • Investing in staffing, training, modeling, and monitoring to address climate-related risks. • Ensuring that members have consistent and reliable data to assist in assessing climate-related risks, including performing internal audits of data and developing plans for acquiring any necessary additional data. • Developing consistent data standards, definitions, and relevant metrics as well as coordinating among members on these items. • Reviewing existing regulations, guidance, and regulatory reporting requirements that are relevant to climate-related risks to determine whether amendments or updates are required to appropriately address those risks. • Determining whether additional regulations are necessary to clarify expectations for regulated or supervised institutions regarding the management of climate-related risks. In addition to the above recommendations to member agencies, the FSOC report announced the creation of a Climate-Related Financial Risk Committee to be formed within FSOC. The committee’s mission is to enhance coordination and consistency among FSOC members. Also, it needs to identify areas for mitigating climate-related risks and act as a coordinating body to share information; facilitate the development of common definitions, standards, and approaches; and foster communication among FSOC members. They will be aided in these missions by another new committee created within FSOC: the Climate-Related Financial Risk Advisory Committee. The FSOC report highlighted several initiatives already underway by member agencies that focus on climate-related financial risks and stability, including the following: • The Securities and Exchange Commission has begun working on a rulemaking proposal on climate risk disclosures by public issuers, which rule it previously announced would be issued in late 2021 or early 2022. Nicholas P. Mooney II is a Member attorney in Spilman Thomas & Battle’s Charleston, West Virginia office. His primary area of practice is consumer financial services litigation in federal and state courts. He has devoted all of his time for more than 20 years to that practice area. He can be reached at (304) 340-3860 or nmooney@spilmanlaw.com . • The Federal Reserve Board has established committees to address climate-related risks. • The Commodity Futures Trading Commission’s Market Risk Advisory Committee has issued a report on climate-related risks and established a Climate Risk Unit to focus on the role of derivatives in understanding and addressing those risks. • The Federal Housing Financing Agency has requested information on climate-related risks from the public. • The Office of the Comptroller of the Currency has formed a Climate Risk Implementation Committee to identify climate- related risks to institutions it supervises. It will also provide recommendations on OCC’s policies to address those risks consistent with Acting Comptroller of the Currency Michael Hsu’s recent statement that “managing climate change risk is a safety and soundness issue.” FSOC’s report and recommendations signal an important step by member agencies to fulfill the president’s Executive Order and Secretary Yellen’s statement earlier this year that FSOC will address “a whole-of-government process to assess climate risk to the U.S. financial system and federal government.” That step, for now, appears to focus on information gathering and creating uniform standards and processes. Banks should be mindful of the recommendations in FSOC’s report and consider how climate-related risks appear in their business lines, as this issue likely will receive greater attention in the short-term.  FSOC’s report and recommendations signal an important step by member agencies to fulfill the president’s Executive Order and Secretary Yellen’s statement earlier this year that FSOC will address “a whole-of-government process to assess climate risk to the U.S. financial system and federal government.”