OCC Withdraws Climate Risk Guidance for Banks

The Office of the Comptroller of the Currency (OCC) has rescinded its guidance principles for banks on climate-related financial risk.

Acting Comptroller of the Currency, Rodney Hood described the guidance principles for banks on climate-related financial risk as “overly burdensome and duplicative.”

Instead, banks will follow the OCC’s existing guidance, which Hood said already requires supervised institutions to maintain a sound risk management framework covering all activities, including potential exposures to severe weather events and natural disasters.

He added: “I will continue to look for appropriate opportunities to calibrate regulatory requirements to be effective, not excessive, while ensuring the safety, soundness and fairness of the federal banking system.”

Despite the changes, the OCC reaffirmed its expectation that all banks maintain effective risk management processes appropriate to their size, complexity and level of risk.

Hood was appointed Acting Comptroller of the Currency on February 10, succeeding Michael Hsu, who had held the role since May 10, 2021. Previously, Hood served as chairman of the National Credit Union Administration.

The OCC’s withdrawal of the guidance comes after its decision in February to exit the Network of Central Banks and Supervisors for Greening the Financial System. Hood stated that involvement in the international climate group exceeded the OCC’s statutory responsibilities and did not align with its regulatory mandate.

At the time, Hood said: “While severe weather events may be a broader societal concern, they do not fall within the OCC's statutory mandate. Going forward, the OCC's focus must singularly remain on fulfilling our core mission."