Gensler Delivers Remarks on Climate-Risk Disclosure, LIBOR at FSOC Meeting

At a recent meeting of the Financial Stability Oversight Council (FSOC), Securities and Exchange Commission (SEC) Chair Gary Gensler delivered remarks on the progress the Commission has made towards increasing climate-risk disclosure and the cessation of LIBOR. On climate-risk disclosure, Chair Gensler highlighted the Commission’s proposals on climate-related disclosure for public companies and investment companies/advisors. He noted the Commission is currently reviewing over 15,000 public comments adding “We greatly benefit from public input and, given the economics and the law, will consider adjustments to the proposed rule that the staff, and ultimately the Commission, think are appropriate in light of those comments.” On LIBOR, Gensler stated the cessation of LIBOR has brought about a myriad of replacement rates which may be prone to similar issues as experienced with LIBOR. He noted that in the United States the main replacement is the Secured Overnight Financing Rate (SOFR). He remarked that “the so-called credit sensitive rates, such as the BSBY rate (Bloomberg Short-Term Bank Yield Index), have infirmities that will not stand the test of time—and will not be good for financial stability or for future FSOC members.”

At the same meeting, the FSOC’s Climate-related Financial Risk Committee (CFRC) issued a staff progress report on a range of actions underway to support disclosure, address data gaps, and assess climate-related financial risks among FSOC-member agencies. The progress includes interagency information sharing and communication through the CFRC, a proposal from the Fed, OCC, and FDIC on proposed principles for climate-related financial risk management for large financial institutions, and the Fed’s launch of a pilot climate scenario analysis exercise for six large bank holding companies, among other projects.

Click here to read the FSOC press release covering the CFRC’s progress to date.
Click here to read the staff progress report on actions to address climate related financial risk.
Click here to read Chair Gensler’s remarks on Climate-Risk Disclosure.
Click here to read Chair Gensler’s remarks on the end of LIBOR.