Regulators Withdraw Climate Risk Principles

WASHINGTON — In a stunning reversal of policy, federal bank regulatory agencies have announced the withdrawal of their interagency Principles for Climate-Related Financial Risk Management. The decision, announced on October 16, 2025, comes after months of debate and speculation.

The Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board, and Office of the Comptroller of the Currency (OCC) jointly rescinded the principles, claiming that their existing safety and soundness standards already require all supervised institutions to have effective risk management commensurate with their size, complexity, and activities. This means that financial institutions are expected to consider and appropriately address all material financial risks, including those related to climate change.

The withdrawal notice, set to be published in the Federal Register, will immediately rescind the principles. It’s worth noting that the OCC had already withdrawn its participation in the principles earlier this year.

Supporters of the principles argue that they were necessary to ensure that financial institutions adequately prepared for the potential impacts of climate change. Critics, however, contend that the principles were overly burdensome and unnecessary given existing regulations.

In a joint statement, the agencies emphasized their commitment to addressing climate-related risks. ‘Our existing safety and soundness standards already require supervised institutions to manage risk effectively,’ the statement read. ‘We remain committed to ensuring that our institutions are resilient to all types of risks, including those related to climate change.’

The decision has sparked a heated debate among financial industry professionals and policymakers. Some worry that the withdrawal could lead to complacency among banks and other financial institutions when it comes to managing climate-related risks.