New York State’s financial services regulator, the Department of Financial Services, which oversees insurance and banking institutions with trillions of dollars in assets, has joined the Network for Greening the Financial System (NGFS), the central bank sustainability network that was formed in late 2017.
The NGFS has grown from an initial eight members to around 50 members now.
The DFS has also joined the Sustainable Insurance Forum (SIF), an international network of insurance supervisors as part of a new climate change focus for the agency under New York Governor Andrew Cuomo.
“As the federal government continues to deny climate change and rolls back important regulations designed to sustain our planet for future generations, New York is once again leading the way to contribute solutions to a real and growing problem,” said DFS Superintendent Linda Lacewell.
“Both the global banking and insurance industries have a critical role to play in addressing climate change, and as a member of NGFS and SIF, DFS will be collaborating with our international partners as well as working closely with our regulated entities to build for a sustainable future.”
The agency said extreme weather events, such as Hurricane Dorian and California wildfires, could cost the US about $750bn in the next decade alone. “Studies have also shown that climate change poses trillions of dollars worth of risk to the U.S. financial system,” the agency said.Frank Elderson, the Dutch central banker who chairs the NGFS, said: “As this is the first member from the US in this group of the willing, I see this as another encouraging sign of growing global momentum for greening the financial system in the financial regulatory community.”
“The global banking and insurance industries have a critical role to play in addressing climate change”
Speaking on a recent RI webinar, Morgan Després, the Deputy Head of Financial Stability at the Banque de France who heads the NGFS Secretariat, said the initiative will now focus on moving from “recommendations” to “practical and concrete deliverables”. These include a handbook of supervisory practices, a “handful” of recommended high-level climate scenarios and a handbook on ESG principles for central banks to use in their investment policies.
The DFS was formed in 2011 from the merger of the New York State Banking Department and the New York State Insurance Department. It regulates more than 1,800 insurance companies with assets of more than $4.7trn and approximately 1,500 banking and other financial institutions with assets totaling more than $2.6trn.
In 2018 it gathered almost $795m in penalties from banks including Société Générale, Deutsche Bank and Goldman Sachs.