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New York Finalizes Steps to Manage Financial Risk Associated with Climate Change

State’s Department of Financial Services’ guidance is a first in the nation step to protect banks and mortgage institutions from climate crisis

WASHINGTON – New York Governor Kathy Hochul announced yesterday that the New York State Department of Financial Services (NYDFS) adopted guidance for New York State-regulated banking and mortgage institutions to help them manage their material financial and operational risks associated with climate change. The guidance is designed to support institutions’ efforts to identify, measure, monitor, and control their material climate-related financial and operational risks. In response, Mekedas Belayneh, policy advocate with Public Citizen’s Climate Program, issued the following statement: 

“Climate change impacts the safety and soundness of all banks, not just the nation’s largest. The NYDFS stands out as the first regulator, at the state or federal level, to rightly recognize and begin addressing climate-related risks to financial institutions regardless of size or business line. The guidance marks a pivotal step in implementing a proportional approach to mitigating climate-related financial risk across all banks and mortgage organizations. 

“Mitigating climate-related financial risk must not result in minimizing access or raising the cost of credit to low-income communities and communities of color. The strength of the guidance comes from its commitment to safeguarding equitable access to financial services for low-income and marginalized communities, and promoting lending for needed climate resiliency.

“Approving the guidance is a welcome step toward protecting financial institutions and the communities they serve. Given the increasing severity of climate-related financial risks, NYDFS should swiftly implement its guidance, and finalize a clear implementation timeline.”

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