In late 2021, the Office of the Comptroller of the Currency (OCC) released a guide for very large banks on how to manage the risks associated with climate change. These principles included consistent monitoring and reporting of information, strategic planning—overall, trying to understand just how bad this situation is going to be and how to protect banks from higher risk. What is missing from this document is any sort of preventive measure and urgency.
I would argue that simply emphasizing the financial risks of climate change for banks is inadequate and short-sighted. It is an oversimplification of a massively complex problem. Yes, banks will be greatly impacted by the devastation from climate change. But it must not be forgotten that the banks will suffer because people will lose their homes, their health and livelihoods, and even their lives to climate change events.
At Creative Investment Research, our position is that the OCC can and must do more. We are calling on the OCC to use its power as a regulatory agency to financially incentivize banks to engage in sustainable behavior by revoking their banking licenses if they do not. If banks are passively or actively using their resources to support polluting and/or socially irresponsible industries and companies, they must simply lose the right to operate as a bank. If banks choose to comply, they have the right to continue operating as before, and the world will be one step closer to preventing the climate change events that the OCC believes will be so costly to banks and the economy. This action is necessary if the OCC wishes to uphold its core values of “integrity, expertise, collaboration, and independence.”
As a young person, graduating from university during a pandemic, trying to decide what I want to do with my life, I am extremely concerned about the economy and the planet that my generation is inheriting. I am not a bank analyst, I am not a bureaucrat, I am a 21-year-old intern, and without sounding too “doomsday,” I will admit that I am scared. Generations before me have focused solely on profit maximization at the cost of the health of the planet and those most vulnerable on it, and even if immediate action is taken, it still seems unclear whether we will ever be able to return to the climate reality that my parents and grandparents lived in. What is clear is that if no action is taken, my future, and my children’s future, will be grim. In fact, if those in power do not take immediate action and nothing changes, I do not feel that it is fair for me to bring children onto a dying planet.
Those in power today will be looked on as complicit in the devastating results of climate change that will only continue to worsen the longer you wait to act, or you can be looked on as responsible heroes who stepped up and took bold action to protect the greater good of human society and all life on Earth. As a regulatory agency, the OCC has the power and responsibility to create huge change and take a leap forward toward a healthier planet and a sustainable economy. It is time to show us through your actions that your core values do matter to you.
Please, OCC, dare to lead.