The financial impacts that result from the economic effects of climate change and the transition to a lower carbon economy pose an emerging risk to the safety and soundness of financial institutions. Financial institutions are likely to be affected by both the physical risks and transition risks associated with climate change.

The Federal Reserve Board of the United States (Fed) invited public comment on proposed principles providing a high-level framework for the management of exposures to climate-related financial risks for large banking organizations with more than 100 billion dollars in total assets.

The proposed general principles cover six main topics: governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement and reporting; and scenario analysis.