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Board Report:  July 31, 2023

The Board's Approach to Climate Risk Supervision at Financial Institutions

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The Board is in the early stages of its supervisory work to assess climate-related financial risk to the safety and soundness of financial institutions. The Board is developing guidance on climate-related financial risk management for the largest financial institutions and has begun a pilot program to understand firms' financial positions under various plausible climate scenarios. However, uncertainty about the timing and magnitude of the effects of climate change and the lack of quality data pose challenges for supervisors and financial institutions.