Davis Polk partner and Financial Institutions head Margaret Tahyar was quoted in Global Banking Regulation Review on the 2023 outlook for climate-related banking regulation. Discussing proposals made by the Federal Reserve, the FDIC and the OCC related to management of large banks’ climate-related financial risks, Margaret said, “They’re all relatively anodyne, in the sense that most banks are already doing that. The way to look at climate risk management, from a bank’s perspective, is credit risk, market risk, liquidity risk. So those proposals are essentially instructing banks to sharpen their pencils a little bit, but not necessarily a huge shift.”

However, she notes that the SEC disclosure proposal creates “enormous angst” among public companies, including listed banks in the U.S., “because it is so complex, and because it covers scopes one, two, and three.” Further, she explains, “it’s asking people to do impossible things in an area where the data in the taxonomies are not mature.”

“I think they’re struggling to finalise the proposal because of the many things they’ve learned during the comment process,” she continued. “It goes far beyond anything that’s been proposed.”

“What’s in store for 2023? Part two: climate risk and green finance,” Global Banking Regulation Review (January 11, 2023) (subscription required)

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