[Update below]
New York State regulators just put the Wall Street financial community on notice that they must begin to include the economic and financial risks of climate change in their business operations.
In an October 29, 2020 regulatory directive, NY financial regulators found:
We live in an increasingly complex world in which crises proliferate and magnify risks to our financial system. Together we are correctly focused on public health, the economy, and racial justice. A fourth crisis, climate change, poses significant financial risks as well. Climate change is increasing the frequency and intensity of extreme weather events and is projected to have profound effects on the U.S. economy and financial system, which we must address.
NY regulators went on to elaborate on:
A) The Severity of Climate Change
B) Risks of Climate Change and Impact on Regulated Organizations
C) Risks of Climate Change and Impact on Regulated Non-Depositories
D) Risk Management
Based on this climate crisis, NY financial regulators mandated that:
DFS expects that all Regulated Organizations:
i. start integrating the financial risks from climate change into their governance frameworks, risk management processes, and business strategies. For example, Regulated Organizations should designate a board member, a committee of the board (or an equivalent function), as well as a senior management function, as accountable for the organization’s assessment and management of the financial risks from climate change. This should include an enterprise-wide risk assessment to evaluate climate change and its impacts on risk factors, such as credit risk, market risk, liquidity risk, operational risk, reputational risk, and strategy risk; an
ii. start developing their approach to climate-related financial risk disclosure and consider engaging with the Task Force for Climate-related Financial Disclosures framework and other established initiatives when doing so.
It is stunning that NY financial regulators issued these regulatory mandates at a time when former Goldman Sachs executive New Jersey Murphy’s administration has done nothing on the financial regulatory side (see NJ DOBI) and is running away from climate regulations.
As recently reported by NJ Spotlight:
Bill Wolfe, a retired DEP policy analyst and the current author of an environmental blog, said the comments “reflect an astonishing abdication of DEP’s regulatory responsibilities,” particularly coming from an administration that claims to be a leader in battling climate change.
“DEP must regulate to achieve deep emissions reductions and reduce risks as clearly reflected by an overwhelming scientific consensus,” Wolfe said. “Delay only makes matters worse.”
Wolfe argued that the DEP is required to regulate development under several laws, including the Flood Hazard Area Control Act and the Coastal Area Facilities Review Act.
Will NJ media fail to report on other State regulatory policy (i.e California and New York) and environmental groups continue to cheerlead for this abdication?
[Update: 10/30/20 – Jeff Tittel of Sierra Club has a good Op-Ed today in the Asbury Park Press, read the whole thing:
It is stunning that almost all NJ environmental groups are still praising this horrible record of Gov. Murphy and DEP Commissioner McCabe, despite this mind blowing fact Tittel buried:
“We are still building in vulnerable areas and granting permits under Christie-era regulations that don’t protect against climate change or storm impacts.” ~~~ end update]