US banks face climate risk data challenges, Fed analysis shows

WASHINGTON, May 9 (Reuters) – U.S. banks face significant data and modeling challenges in predicting the impact of climate change on their loan books, the Federal Reserve said on Thursday after its first analysis on the issue.

In the exercise, undertaken over several months in 2023, the central bank aimed to understand how lenders would manage the risks of rising temperatures and changing external policies.

They found a wide range of approaches, the report said. In many cases, the lenders relied on external vendors to fill in gaps in data and modeling.

“Participants suggested that climate-related risks are highly uncertain and challenging to measure,” the report said.

The participating banks were the country’s biggest: Bank of America (BAC.N), opens new tab, Citigroup (C.N), opens new tab, Goldman Sachs (GS.N), opens new tab, JPMorgan Chase (JPM.N), opens new tab, Morgan Stanley (MS.N), opens new tab and Wells Fargo (WFC.N), opens new tab.

Spokespeople for Morgan Stanley and Citigroup declined to comment. Representatives for the other banks did not immediately respond to requests for comment.

Source: REUTER