By: Scott R. Wilson | Jeffrey L. Hare | Jesse Medlong | Dante Alessandri
In a recent letter, the New York State Department of Financial Services (NYDFS) called on state-regulated financial institutions to integrate climate-related financial risks into their governance frameworks, risk management processes, and business strategies.
Investors increasingly view climate as an area of business risk, and this confirms regulators are beginning to view it as a supervisory risk as well. Incorporating climate change risk analysis can help financial institutions to better understand risks to their portfolios and clients, and to meet regulatory expectations. Now, with NYDFS announcing its “expectation” that institutions within its purview account for climate change in their risk assessments, New York has signaled a new approach in its efforts to combat climate change.