Dive Brief:

• The Office of the Comptroller of the Currency completed its first climate risk assessment of more than two dozen banks in recent months, according to Reuters, which cited sources familiar with the matter.
• The assessment, which the OCC called a "discovery review," involved the regulator assessing how banks account for the impact of climate change on loan books and lines of business, Reuters reported. 
• The review also explored how the nation’s largest banks manage energy finance and greenhouse gas emissions, sources told the wire service.

Dive Insight:

The agency’s climate risk assessment comes several months after regulators laid out principles for climate-related financial risk management for large financial institutions. 

The OCC, alongside the Federal Reserve and Federal Deposit Insurance Corp., in October released guidance designed to support the identification and management of climate-related financial risks by banks with more than $100 billion in assets.

The OCC’s discovery review was aimed at setting a baseline of banks’ climate risk practices, which the OCC can measure against to determine their progress in implementing the guidance, sources told Reuters.

The regulator could take disciplinary action as early as next year against firms that fail to show progress, the sources told the wire service.

Most of the OCC’s meetings with banks occurred in the second half of 2023, and involved specialists in risk management, operations, monitoring and audit, sources told Reuters. Chief risk officers attended some of the meetings, the sources said.

OCC supervisors questioned firms on how they would prepare for a transition to low-carbon energy and asked how they use data and monitor progress towards targets, the sources told Reuters.

In a statement to Banking Dive, an OCC spokesperson said the regulator has been conducting supervision activities at its largest banks to understand the banks’ climate-related financial risk management programs. 

“The OCC’s focus on and supervision of climate-related financial risk is firmly rooted in its mandate to ensure that national banks and federal savings associations operate in a safe and sound manner,” the spokesperson said in an emailed statement. “The OCC's approach is focused on banks' risk management, not on setting industrial policy.”