Board of Governors of the Federal Reserve System

The Federal Reserve has narrow, but important, responsibilities regarding climate-related financial risks, which are tightly linked to our responsibilities for bank supervision. Banks need to understand, and appropriately manage, their material risks, including the financial risks of climate change. The guidance issued today is squarely focused on prudent and appropriate risk management. I am therefore able to support its issuance.

It is also important to continue to be clear on what we are not doing. The Federal Reserve is not and will not be a "climate policymaker." Decisions about policies to address climate change must be made by the elected branches of government. Over time, we must be vigilant to avoid crossing or blurring that line. It is not the Fed's role to tell banks which businesses they can and cannot lend to, and this guidance is not intended to do so. The guidance clearly articulates this fundamental principle—an important addition to the proposal.

As the guidance also acknowledges, both we and the banks themselves are in the early stages of understanding and measuring the financial risks posed by climate change and how best to manage them. Accordingly, our work in this area must continue to remain grounded in data, measured in its approach, and tightly linked to our responsibilities.