By Pete Schroeder

WASHINGTON, (Reuters) – A second U.S. regulator for banking has presented its views on how banks can protect themselves from the risks posed by climate change.

Federal Deposit Insurance Corporation of the United States (FDIC), published draft principles Wednesday that directed bank boards and top management to establish robust frameworks to protect against financial climate risk.

This proposal is similar to one that was published by the Office of the Comptroller of the Currency in December. It’s the latest example of U.S. policymakers trying to protect the U.S. banking system from the effects of climate change.

Climate change could have devastating effects on trillions of assets worldwide. These include rising sea levels and worsening flooding and fires.

Martin Gruenberg, acting Chairman of FDIC, stated that climate-related risks present a significant threat to the U.S. Financial System and, if not properly assessed and managed could pose a risk to financial stability and safe banking.

The FDIC principles, like the OCC drafts, envision banks implementing a comprehensive plan to integrate climate risk management in every aspect of their businesses.

In the meantime, the Federal Reserve is developing its “scenario analytics” in order to assess climate-related losses at large bank branches. Reuters has previously reported that banks large and small expect government-run analyses to start as early as 2023.