Pete Schroeder, Andrea Shalal

WASHINGTON, (Reuters) – The Financial Stability Oversight Council of the United States (FSOC), a panel composed top financial regulators published a roadmap on how financial agencies can integrate climate risk management in their regulatory systems.

This comes amid a strong push by Democratic President Joe Biden to combat climate change. Below are some key points.

CLIMATE COMMITTEES

In the first rework of the 2010 oversight body, the report suggests that FSOC creates new panels within its internal structure devoted to climate matters.

A panel of regulators would consist of members and be charged with monitoring agency efforts to monitor and measure climate risk. A senior Treasury official stated that the panel would regularly report its findings in an effort to keep regulatory momentum for climate risks.

External advisors will make up the second panel, which includes representatives from finance and academia. The FSOC has never created an advisory board on a given issue.

PLUG DATA GAPS

Many of the suggestions are directed at improving and refining the data available to the regulators, industry, and public for measuring climate-related risks in financial markets.

This report calls for regulators’ to provide consistent, reliable data that can be used to assess climate risks. It includes tallying internal data as well as figuring out where to locate external data.

This report identifies Office of Financial Research as a possible data repository and an analytical resource for regulators. It was created in conjunction with FSOC after the financial crisis of 2007-09.

CLIMATE DISASTERS

The FSOC backs a large regulatory initiative that is already in progress at the Securities and Exchange Commission. These regulations would set standards for companies to disclose climate information. Panel members recommended that all agencies review and revise their climate disclosure requirements in order to better capture the risks posed by climate change.

VULNERABLE POPULATIONS

The report, which was a direct nod to Biden’s emphasis on social equity and recommended that regulators examine policies that can help to protect those most vulnerable to climate change.

A second recommendation was to the Federal Insurance Office that it quickly analyzes the effects of climate change on insurance coverage and reinsurance, especially in the most affected regions.

SCENARIO ANALYSIS

A second recommendation is that you work with other parties (including overseas regulators) to develop forecasting tools to help U.S. agencies assess future climate risk.

In particular, the FSOC suggested agencies use “scenario analyses” to determine how their institutions might fare under different climate scenarios.