The relationship between us and our surroundings is a complicated one. For this affiliation to flourish, both the parties must always work in sync, as even a single discrepancy can lead to undesirable ramifications. Such an arrangement packaged together with our shared tendency of constantly evolving creates a scenario that poses serious challenges to our pursuit of collaborating at every step. To ease it up a bit, we have brought in and established dedicated regulatory bodies across the board, thus allowing the world to move forward through a more guided approach. The rules and regulations put-forth by these regulators aren’t just a hollow attempt to control the masses. Instead, they are intended to provide us with a framework, which we can use to carry out a range of tasks whilst keeping ourselves from doing anything detrimental to our surroundings. Now, even though this core intention has remained the same throughout the years, the objectives have changed drastically. A good part of it is, of course, down to technology. As we go all in on technology to accelerate our growth, we seem to be losing sight of the bigger picture, and that includes our environment itself. Well in tune with the long-term effects of a degrading atmosphere, the New York Department of Financial Services (NYDFS) has boldly taken the lead to shake things up.
NYDFS has formally requested state-regulated financial institutions to make climate change risks an integral piece of their business strategies, governance structures, and risk management procedures. It’s hard to believe, but no other agency is known to have made such a request before, and that makes NYDFS’ move even more special. In its list of recommendations, the agency reflected on a need for greater accountability around the said regard, hence the financial institutions are now advised to form a committee, which will oversee their management of climate change through credit, liquidity, and market factors etc. NYDFS also pointed out the importance of joining reputed climate-focused networks when developing your own strategy to deal with similar risks.
“As the global public health pandemic of COVID-19 has made clear, preparation is key to addressing systemic risks. By the time a crisis occurs, it is simply too late,” stated Linda Lacewell, New York’s superintendent of financial services.
NYDFS’s request is believed to be somewhat encouraged by a recent report from CFTC’s subcommittee that spoke at length about mandating companies to pay for their gas emissions. NYDFS didn’t explicitly extend a suggestion of this nature, but the regulator did urge each institution “should take a proportionate approach that reflects its exposure to the financial risks from climate change and the nature, scale, and complexity of its business.”