Bank Climate Rules Rescinded: What to Do Now

Quick answer

Federal regulators have rescinded the October 2023 Principles for Climate-Related Financial Risk Management for very large banks. The agencies say existing safety-and-soundness rules already cover material risks. For bank risk and compliance teams, the immediate job is to check your policies, document your response, and keep monitoring climate risks.

What exactly was rescinded?

The Federal Reserve, OCC, and FDIC withdrew the 2023 interagency principles that guided large banks on managing climate-related financial risk. Those principles covered planning for physical risks (like storms) and transition risks (like policy shifts or changing markets).

Timeline (short)

• Oct 30, 2023: Principles published for banks with over $100B in assets.
• March 31, 2025: OCC previously withdrew participation (OCC release).
• Oct 16, 2025: Agencies jointly announced rescission (Fed statement).

Why did regulators make this change?

The agencies say the principles were duplicative and could distract from existing rules that cover safety and soundness. Officials complained of mission creep and want to focus on risks that clearly affect financial stability. Critics, including advocacy groups, say this makes banks less prepared for growing climate shocks. See reporting from CNBC and statements from groups like the Sierra Club and Common Dreams.

"We expect all banks to have effective risk management processes commensurate with their size," wrote the agencies in their rescission notices.

What this signals

Short term: oversight will emphasize existing risk rules rather than climate-specific guidance. Medium term: expect uneven approaches across banks. Some large banks will keep doing climate scenario analysis voluntarily; others may scale back. Trend insight: when federal guidance is removed, private-sector standards and state rules often grow stronger.

What should your bank do now? A 2-minute compliance checklist

Use this checklist to act fast, document work, and reduce regulatory risk.

1. Confirm scope: Decide which business units are affected and who owns climate-related risk work.
2. Document current work: List active climate scenario analyses, stress tests, and governance steps. Save dates and authors.
3. Map to material risk: Tie climate-related exposures to credit, market, operational, and insurance risks already in your framework.
4. Update risk register: If risks are material, record them and note controls and indicators to watch.
5. Prepare a short memo: Explain why you are maintaining or changing practices and file it with your board or senior risk committee.
6. Set a cadence: Keep quarterly updates; keep external communications aligned with your actions.

Actions for the first 24–72 hours

• Notify senior risk, compliance, and legal teams.
• Send the 1-page memo to the board or risk committee.
• Preserve records of any climate analyses done to date.

Practical tips for different teams

• Risk managers: Map climate exposures to existing supervisory categories and adjust stress-test inputs as needed.
• Compliance: Confirm your reporting lines and maintain audit trails for decisions about guidance implementation.
• Investor relations: Explain the change and your company’s plan to keep investors informed.

FAQ

Will my bank be fined for stopping climate work?

Not automatically. Regulators expect all material risks to be managed. If climate risks are material and ignored, that creates supervisory risk.

Should we stop climate scenario analysis?

No. If analysis helps you manage credit, insurance, or market risk, keep it. Many banks find the analysis valuable even without agency principles.

What can citizens do?

Ask elected officials and regulators whether they want clear rules for climate-related financial risk. Public comments and stakeholder engagement shape future guidance.

Sources

Official agency notices: Federal Reserve, OCC, FDIC. Reporting and responses: CNBC, Sierra Club, Common Dreams.