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February 13, 2022

Jupiter Advises OCC to Base Guidance for Banks on Best-in-Science Climate Data and Models


Jupiter advocates that top US regulator require banks to manage climate risk based on objective and transparent data, consistent metrics, and integrated assessment of transition and physical risk

In response to OCC’s call for input, Jupiter offers principles designed to help banks improve oversight of climate-related financial risks

Jupiter has urged the U.S. Office of the Comptroller of the Currency (OCC) to formulate climate-related financial risk guidance, and any future standards for large U.S. banks, based on best-available data and climate science, consistent metrics, harmonized domestic and global standards, an integrated approach to assessing both transition and physical risk, and other key criteria.

In Jupiter’s response to the OCC’s draft principles for climate-related risk management for large banks, CEO and Co-Founder Rich Sorkin compared the threat of a systemic crisis caused by climate-change-driven extreme weather events to the 2008 financial and 2020 COVID-19 pandemic calamities.

“The availability of data, derived metrics, and services to facilitate climate-related risk management has matured … [The OCC should] encourage the rapid transition from existing, backward-looking model systems—often decades old in their assumptions and data sources—to the latest generation of modeling approaches that employ new data types, and inexpensive, cloud-based, high-performance computing that are readily available and established throughout the private sector.”

Rich Sorkin, CEO, Jupiter

The issues surrounding climate change’s impact on the financial system “[must] be viewed in the context that the most unlikely events can have the biggest economic impacts,” Mr. Sorkin cautions. “This occurred in 2008 and 2020. Neither was appropriately factored into risk management practices globally—and both drove enormous taxpayer expenses to stabilize a battered economy. Often, the worst impacts of any event can be the result of a combination of several unlikely, uncorrelated drivers.”

In the response, Mr. Sorkin makes multiple recommendations regarding the OCC’s draft principles, and highlights elements critical to facilitating improved climate-related financial risk management.

Download the full response below. And schedule a ClimateScore demo today.


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