U.S. Climate Principles Withdrawn

By: Courtney Burton

On October 16, 2025, U.S. bank regulators withdrew their climate-risk framework

On October 16, 2025, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (the “Agencies”) jointly announced the withdrawal of their 2023 interagency "Principles for Climate-Related Financial Risk Management for Large Financial Institutions" (the "Principles"), with the rescission effective immediately. The Federal Reserve's announcement page provides comprehensive details:

https://www.federalreserve.gov/newsevents/pressreleases/bcreg20251016a.htm 

The  Principles were purportedly designed to support the identification and management of climate-related financial risks by financial institutions with more than $100 billion in total consolidated assets. The Principles were intended to focus financial institutions on key aspects of climate-related financial risk, covering six areas: governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis. The Principles were intended to provide guidance to large financial institutions as they develop strategies, deploy resources, and build capacity to identify, measure, monitor, and control for climate-related financial risks.

The Agencies said they no longer believe a separate framework for managing climate-related risks is necessary, emphasizing that current supervisory standards require institutions to maintain effective risk management practices suited to their size, complexity, and operations. The Office of the Comptroller of the Currency's bulletin stated that "the principles are rescinded" because they "could distract from the management of other potential risks identified and addressed by financial institutions' existing risk management processes and the agencies' other risk management rules and guidance." The OCC had already withdrawn its participation in the principles on March 31, 2025.

The Agencies emphasize that existing safety and soundness standards remain in effect, requiring all supervised institutions to maintain effective risk management commensurate with their size, complexity, and activities, and to appropriately address all material financial risks, including emerging risks.