In 'Road Map for a More Sustainable Future,' NY Regulator Tells Banks to Consider Climate Risks in Planning

By Brett Wilkins
Regulators in New York state announced Thursday that banks and other financial services companies are expected to plan and prepare for risks posed by the climate crisis.
In a letter to banks and other financial businesses, New York State Department of Financial Services (NYDFS) Superintendent Linda Lacewell said that "climate change poses significant financial risks" and that global heating is "increasing the frequency and intensity of extreme weather events and is projected to have profound effects on the U.S. economy and financial system, which we must address."
To that end, Lacewell said NYDFS expects all state-regulated entities to "start integrating the financial risks from climate change into their governance frameworks, risk management processes, and business strategies."
This news makes New York's state financial regulator the first banking regulator in the U.S. to explicitly call on… https://t.co/pTz8M1arRL— Laura Alix (@Laura Alix)1603990312.0
The expectation applies to banking organizations, mortgage companies, trust companies, and non-depositories including virtual currency firms, licensed lenders, money transmitters, and others entities subject to NYDFS regulation.
Lacewell's letter said the agency "is developing a strategy for integrating climate-related risks into its supervisory mandate and will engage with your organizations and work and coordinate with our U.S. and international counterparts to develop effective supervisory practices, as well as guidance and best practices in order to mitigate the financial risks from climate change."
The superintendent cited the Covid-19 pandemic to illustrate how "preparation is key to addressing systemic risks."
"By the time a crisis occurs, it is simply too late," she wrote.
NYDFS is the first U.S. regulator to explicitly request banks in its jurisdiction to include climate risk analysis in their planning, according to American Banker.
Lacewell said banks should get to work immediately.
"Climate change is happening now, and we have to take steps to manage the financial risks now," she stressed in a Thursday press release. "We want to ensure that every institution is managing its own individual risks from climate change, which is critical for the safety and soundness of the financial services industry."
"By working with the industry and engaging in a dialogue on this serious issue, we are creating a road map for a more sustainable future," said Lacewell.
Although the letter is not a directive forcing to banks to make any actual climate-mitigating changes, climate activists nevertheless welcomed the news.
This is big! And it sets the stage for an even more important financial regulator, a Biden Treasury Secretary, to a… https://t.co/vCnyUbl3qo— Jamie Henn (@Jamie Henn)1603983250.0
Anticipating the election of Democratic presidential nominee Joe Biden, 350.org co-founder and Fossil Free Media director Jamie Henn tweeted that the move "sets the stage for an even more important financial regulator, a Biden treasury secretary, to act."
On the national level Sen. Jeff Merkley (D-Ore.) last week unveiled a pair of bills that aim to push banks and international financial institutions to divest from the fossil fuel industry. Introducing the legislation, the senator cited a recent Commodity Futures Trading Commission report warning that the climate crisis threatens the U.S. financial system.
Reposted with permission from Common Dreams.
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Wisdom the mōlī, or Laysan albatross, is the oldest wild bird known to science at the age of at least 70. She is also, as of February 1, a new mother.
<div id="dadb2" class="rm-shortcode" data-rm-shortcode-id="aa2ad8cb566c9b4b6d2df2693669f6f9"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1357796504740761602" data-partner="rebelmouse"><div style="margin:1em 0">🚨Cute baby alert! Wisdom's chick has hatched!!! 🐣😍 Wisdom, a mōlī (Laysan albatross) and world’s oldest known, ban… https://t.co/Nco050ztBA</div> — USFWS Pacific Region (@USFWS Pacific Region)<a href="https://twitter.com/USFWSPacific/statuses/1357796504740761602">1612558888.0</a></blockquote></div>
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By Hui Hu
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Comparing rime ice and glaze ice shows how each changes the texture of the blade. Gao, Liu and Hu, 2021, CC BY-ND
Ice buildup changes air flow around the turbine blade, which can slow it down. The top photos show ice forming after 10 minutes at different temperatures in the Wind Research Tunnel. The lower measurements show airflow separation as ice accumulates. Icing Research Tunnel of Iowa State University, CC BY-ND
How ice builds up on the tips of turbine blades. Gao, Liu and Hu, 2021, CC BY-ND
While traditional investment in the ocean technology sector has been tentative, growth in Israeli maritime innovations has been exponential in the last few years, and environmental concern has come to the forefront.
theDOCK aims to innovate the Israeli maritime sector. Pexels
<p>The UN hopes that new investments in ocean science and technology will help turn the tide for the oceans. As such, this year kicked off the <a href="https://www.oceandecade.org/" target="_blank" rel="noopener noreferrer">United Nations Decade of Ocean Science for Sustainable Development (2021-2030)</a> to galvanize massive support for the blue economy.</p><p>According to the World Bank, the blue economy is the "sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem," <a href="https://www.sciencedirect.com/science/article/pii/S0160412019338255#b0245" target="_blank" rel="noopener noreferrer">Science Direct</a> reported. It represents this new sector for investments and innovations that work in tandem with the oceans rather than in exploitation of them.</p><p>As recently as Aug. 2020, <a href="https://www.reutersevents.com/sustainability/esg-investors-slow-make-waves-25tn-ocean-economy" target="_blank" rel="noopener noreferrer">Reuters</a> noted that ESG Investors, those looking to invest in opportunities that have a positive impact in environmental, social and governance (ESG) issues, have been interested in "blue finance" but slow to invest.</p><p>"It is a hugely under-invested economic opportunity that is crucial to the way we have to address living on one planet," Simon Dent, director of blue investments at Mirova Natural Capital, told Reuters.</p><p>Even with slow investment, the blue economy is still expected to expand at twice the rate of the mainstream economy by 2030, Reuters reported. It already contributes $2.5tn a year in economic output, the report noted.</p><p>Current, upward <a href="https://www.ecowatch.com/-innovation-blue-economy-2646147405.html" target="_self">shifts in blue economy investments are being driven by innovation</a>, a trend the UN hopes will continue globally for the benefit of all oceans and people.</p><p>In Israel, this push has successfully translated into investment in and innovation of global ports, shipping, logistics and offshore sectors. The "Startup Nation," as Israel is often called, has seen its maritime tech ecosystem grow "significantly" in recent years and expects that growth to "accelerate dramatically," <a href="https://itrade.gov.il/belgium-english/how-israel-is-becoming-a-port-of-call-for-maritime-innovation/" target="_blank" rel="noopener noreferrer">iTrade</a> reported.</p><p>Driving this wave of momentum has been rising Israeli venture capital hub <a href="https://www.thedockinnovation.com/" target="_blank" rel="noopener noreferrer">theDOCK</a>. Founded by Israeli Navy veterans in 2017, theDOCK works with early-stage companies in the maritime space to bring their solutions to market. The hub's pioneering efforts ignited Israel's maritime technology sector, and now, with their new fund, theDOCK is motivating these high-tech solutions to also address ESG criteria.</p><p>"While ESG has always been on theDOCK's agenda, this theme has become even more of a priority," Nir Gartzman, theDOCK's managing partner, told EcoWatch. "80 percent of the startups in our portfolio (for theDOCK's Navigator II fund) will have a primary or secondary contribution to environmental, social and governance (ESG) criteria."</p><p>In a company presentation, theDOCK called contribution to the ESG agenda a "hot discussion topic" for traditional players in the space and their boards, many of whom are looking to adopt new technologies with a positive impact on the planet. The focus is on reducing carbon emissions and protecting the environment, the presentation outlines. As such, theDOCK also explicitly screens candidate investments by ESG criteria as well.</p><p>Within the maritime space, environmental innovations could include measures like increased fuel and energy efficiency, better monitoring of potential pollution sources, improved waste and air emissions management and processing of marine debris/trash into reusable materials, theDOCK's presentation noted.</p>theDOCK team includes (left to right) Michal Hendel-Sufa, Head of Alliances, Noa Schuman, CMO, Nir Gartzman, Co-Founder & Managing Partner, and Hannan Carmeli, Co-Founder & Managing Partner. Dudu Koren
<p>theDOCK's own portfolio includes companies like Orca AI, which uses an intelligent collision avoidance system to reduce the probability of oil or fuel spills, AiDock, which eliminates the use of paper by automating the customs clearance process, and DockTech, which uses depth "crowdsourcing" data to map riverbeds in real-time and optimize cargo loading, thereby reducing trips and fuel usage while also avoiding groundings.</p><p>"Oceans are a big opportunity primarily because they are just that – big!" theDOCK's Chief Marketing Officer Noa Schuman summarized. "As such, the magnitude of their criticality to the global ecosystem, the magnitude of pollution risk and the steps needed to overcome those challenges – are all huge."</p><p>There is hope that this wave of interest and investment in environmentally-positive maritime technologies will accelerate the blue economy and ESG investing even further, in Israel and beyond.</p>- 14 Countries Commit to Ocean Sustainability Initiative - EcoWatch ›
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