On June 3, 2022, ISDA and the Securities Industry and Financial Markets Association submitted a joint response to the Federal Deposit Insurance Corporation (FDIC) on the principles for climate-related financial risk management for large banks. The associations welcome the FDIC’s principles-based approach to addressing risk management practices related to climate risk, and support the FDIC’s efforts to establish regulatory principles and guidance for new and emerging climate-related financial risks that align with the existing risk management regulatory framework.
In the context of climate-related financial risk, member bank risk management practices have centered on the identification and evaluation of potential climate-related financial risks under different scenarios, specifically focusing on assessing potential materiality for different risks over various time horizons. These efforts have helped identify some inadequacies and challenges, including data limitations and complexities arising from a variety of different scenarios and time horizons. ISDA’s members are committed to maintaining the safety and efficiency of the US financial markets and recognize that banks have a big role to play in the management of climate-related financial risks.