Bank Policy Institute (BPI)

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Washington DC, United States
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Sustainable Finance Lobbying Overview: The Bank Policy Institute (BPI) appears to have mixed but overall negative engagement on sustainable finance policy, engaging most actively against efforts to regulate corporate climate disclosures and climate-related risk management.

Top-Line Messaging on Sustainable Finance Policy: As a member of the US Climate Finance Working Group, BPI has stated support for the role of the financial sector in delivering the goals of the Paris Agreement, but in a 2021 press release, BPI called for continued financing of oil and gas. BPI has, in several instances, suggested that climate risk does not pose a threat to bank stability or the stability of the financial system. BPI has emphasized that the majority of climate change policy should be implemented in the real economy, and any regulation for the finance sector should incentivize the financing of sustainable projects rather than adjust capital requirements or penalize investment in certain companies or sectors.

Position on Regulated Corporate ESG Disclosure: BPI appears unsupportive of regulated corporate ESG disclosure, arguing that reporting capacity differs between and within sectors and therefore mandatory disclosure requirements would be too difficult. After the SEC proposed its climate disclosure rule in March 2022, BPI warned that the proposal was overly ambitious, and urged the SEC to proceed in a more “measured” manner. In its letter to the Commission in June 2022, BPI outlined several objections to the proposed climate disclosure rule, including Scope 3 disclosure requirements and several qualitative and quantitative risk disclosure provisions. In August 2022, BPI sent a letter to the California State Assembly in opposition to SB 260, a corporate greenhouse gas disclosure bill. The bill subsequently did not pass. In 2022 comments to the Financial Stability Board (FSB), BPI stressed that financial institutions’ voluntary disclosures were sufficient, and did not support new climate-related risk reporting requirements. In July 2022 BPI outlined objections to the International Sustainability Standards Board (ISSB) draft climate disclosure standards, and in October 2022 BPI expressed its opposition to ISSB’s decision to include Scope 3 emissions in the global baseline for climate-related disclosure.

Position on Incorporating ESG Factors Into Investor Duties: Under the Trump administration, BPI opposed policy changes that sought to limit ESG investing and lending. BPI opposed the Office of the Comptroller of the Currency Fair Access rule that sought to limit the inclusion of ESG factors in banking decisions, and Executive Vice President and head of regulatory affairs John Court called the rule “poorly constructed” and warned that it could inhibit banks’ ESG goals.

Position on Incorporating ESG Factors Into Risk Management/Prudential Regulation: BPI appears unsupportive of incorporating ESG factors into risk management and prudential regulation. A 2020 BPI research paper outlined the “potentially insurmountable” methodological challenges in climate change stress testing. In a 2020 American Banker article, CEO Greg Baer called climate-related stress testing for banks a “highly inefficient vehicle” that “risks degrading the integrity of financial regulation.” In a March 2021 press release, BPI cautioned against the use of policy tools, like climate-related stress testing, that “artificially alter” capital allocation. A blog post from January 2022 suggested that the “late action” scenario in the Bank of England’s Climate Biennial Exploratory Scenario was overstating climate risks and a blog post from September 2022 suggested that regulatory efforts to incorporate climate risk into bank risk management are unnecessary, and “disproportionate.”

In February 2022, BPI submitted comments to the Office of the Comptroller of the Currency (OCC) and the Basel Committee on Banking Supervision in response to their respective proposals for climate-related financial risk management for banks. In its letter to the OCC, BPI stated opposition to prescriptive requirements and suggested that several climate-related bank supervisory actions were premature. In its letter to the Basel Committee, BPI advocated for weakening the proposed principles, not supporting the use of stress testing or prescriptive risk management mandates. BPI took a similar position in its letter to the Federal Deposit Insurance Corporation (FDIC) in May 2022, opposing prescriptive risk management requirements and asking the FDIC to remove a provision that directs financial institutions to mitigate the impact risk management practices may have on the broader economy. In comments to the FSB in June 2022, BPI suggested that the Board had provided an “overly prescriptive” view of how banks and supervisors should manage climate risk, and asserted that macroprudential tools are of limited use to address climate risk.

Transparency: BPI discloses its positions on sustainable finance policies through letters to regulators, testimony, blog posts, and research available on its website. BPI is transparent about membership, including which companies and individuals hold key positions on the executive board.

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