New York State Department of Financial Services ("NYDFS") Superintendent Linda A. Lacewell criticized two federal rules on investor risk and called on financial regulators to mirror actions taken by NYDFS on climate change risk. The Superintendent criticized the DOL's amendments to the "investment duties" regulation and the OCC's fair access to financial services rule (see previous coverage here and here, respectively) - as "actively undermin[ing] progress on climate change."
Ms. Lacewell suggested that financial regulators' actions mirror those taken by NYDFS, including:
- coordinating with European regulators - specifically, the Bank of England and the Banque de France - that are more advanced in integrating climate risk;
- hiring a director of sustainability and adopting climate initiatives;
- joining the Network for Greening the Financial System, a step also taken by the Federal Reserve Board (see previous coverage here); and
- issuing industry letters that set "proportionate" expectations with regard to how financial institutions integrate financial risks arising from climate change into their governance (see previous coverage here).
Commentary
The NYDFS recommendations - coordinate, hire, join, be proportionate - do not provide much insight into specific actions that should be taken. However, in a previous letter Ms. Lacewell suggested that New York banks should disinvest from a variety of issuers, including energy companies, Bitcoin miners, and even municipal bonds, which she had described as being at risk for lower valuation as a result of rising sea levels.
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