The Federal Deposit Insurance Corporation and the Federal Reserve Board jointly announced on 16 October 2025 that they were rescinding the interagency guidance on climate-related financial risk management for large financial institutions that the agencies had jointly issued in October 2023. The rescission completes a process that began when the Office of the Comptroller of the Currency withdrew its own participation in the guidance on 31 March 2025.
The guidance being rescinded was formally titled the 'Principles for Climate-Related Financial Risk Management for Large Financial Institutions' and had set out supervisory expectations for how large banks should identify, measure, monitor, and manage climate-related financial risks across their portfolios and operations. Its repeal removes those expectations from the supervisory framework applicable to the institutions the three agencies oversee.
OCC WITHDRAWAL PRECEDED JOINT RESCISSION
The OCC's decision to withdraw from the guidance in March 2025 left the document in an anomalous position, as it had been issued as a joint product of all three federal banking regulators but was no longer supported by one of its co-authors. The FDIC and Fed's October announcement brings the full repeal into effect, ensuring that none of the three principal federal banking supervisors will apply the principles set out in the October 2023 document.
The sequence of withdrawals reflects the shift in federal banking supervision since the change in administration, with the new leadership at the three agencies moving to dismantle climate-specific supervisory frameworks that were developed under different leadership. The October 2023 guidance had been the first jointly issued supervisory statement by the three agencies specifically addressing climate risk, and its removal marks the end of that initiative.
Large financial institutions that had been working to align their internal risk management frameworks with the principles set out in the 2023 guidance will now need to assess how to treat their existing work. The rescission does not prohibit banks from managing climate-related financial risks, but removes the specific expectation that supervisors would evaluate their risk management practices against the stated principles.
BROADER REGULATORY ROLLBACK CONTEXT
The rescission of the climate risk guidance is part of a broader reassessment by federal financial regulators of the ESG-related supervisory frameworks and disclosure requirements that were developed in recent years. Separately, the Securities and Exchange Commission has also revisited climate-related disclosure rules, and several states have enacted legislation seeking to restrict the use of ESG criteria in public fund management.
Proponents of the original guidance had argued that climate-related financial risks — including physical risks from extreme weather events and transition risks arising from policy and technology changes affecting carbon-intensive sectors — were material to the safety and soundness of large financial institutions and warranted specific supervisory attention. The agencies' rescission reflects a different view of whether the federal banking supervisory framework is the appropriate vehicle for addressing those concerns.
The Competitive Enterprise Institute and other organisations that had advocated for the repeal of the guidance welcomed the FDIC and Fed's announcement as a correction of what they characterised as an overreach of the banking agencies' mandates. Regulated institutions will now look to the agencies for signals about how climate risk considerations will be handled within the broader existing supervisory framework going forward.