On January 17, 2023, the Board of Governors of the Federal Reserve System (“Federal Reserve”) launched its pilot climate scenario analysis exercise (“CSA”) by publishing instructions for the six US banking organizations that will participate.

As part of the CSA, participating organizations will submit data templates, supporting documentation, and responses to qualitative questions to the Federal Reserve by July 31, 2023. The Federal Reserve is continuing to collect information on climate risk management practices, and banks should consider reviewing the CSA instructions to better understand the Federal Reserve’s expectations.

In this Legal Update, we provide background on the Federal Reserve’s climate risk management initiative and highlight key items in the CSA instructions.

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