Agencies Withdraw Climate Risk Management Principles for Large Banks

Key Takeaways

• Withdrawal Effective Immediately: The FDIC, Federal Reserve, and OCC have jointly rescinded the Principles for Climate-Related Financial Risk Management for Large Financial Institutions, effective upon publication in the Federal Register.
• Existing Standards Deemed Sufficient: Regulators said current safety and soundness standards already require banks to manage all material financial risks, including emerging climate-related risks.
• OCC’s Early Exit: The OCC had withdrawn its participation in March 2025, signaling the agencies’ growing skepticism toward maintaining separate climate-specific frameworks.
• Focus on Broader Risk Oversight: The agencies argued that standalone climate risk guidance could distract institutions from other critical risk management priorities.

Deep Dive

The Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board (FRB), and the Office of the Comptroller of the Currency (OCC) have jointly withdrawn their Principles for Climate-Related Financial Risk Management for Large Financial Institutions, rescinding guidance that had been in place since October 2023 in a major policy reversal.

The agencies said that separate climate-risk principles are no longer necessary, noting that their existing safety and soundness standards already require financial institutions to maintain effective risk management programs suited to their size, complexity, and activities. They emphasized that banks are already expected to consider all material financial risks—including those that are emerging, such as climate-related threats and to maintain resilience against them.

“The agencies’ existing safety and soundness standards require all supervised institutions to have effective risk management commensurate with their size, complexity, and activities,” the joint statement read. “Institutions are expected to consider and appropriately address all material financial risks and should be resilient to a range of risks, including emerging risks.”

Originally issued in 2023, the interagency principles applied to financial institutions with over $100 billion in consolidated assets, providing guidance on integrating climate-related risks into governance and risk frameworks. Earlier this year, the OCC withdrew its participation, a move that signaled growing skepticism within the agencies about maintaining a separate framework for climate risk oversight.

In rescinding the guidance, regulators argued that additional principles could distract from managing other potential risks that banks already address under existing supervisory rules and standards. The agencies also clarified that neither the withdrawn principles nor the decision to rescind them impose or remove any obligations for banks regarding the consideration of climate risks or other specific risk categories.

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