Bank Policy Institute (BPI)

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Washington DC, United States
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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, outlining a framework for the transformation of the financial sector in the Financing a U.S. Transition to a Sustainable Economy brief. However, 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. In a 2021 press release, BPI called for continued financing of new oil and gas. Additionally, BPI has suggested that climate risks do not pose a significant threat to bank stability, emphasizing that climate is akin to any other risk banks already know how to manage.

BPI appears to have not supported regulated corporate ESG disclosure, arguing that reporting capacity differs between and within sectors and therefore mandatory disclosure requirements would be too ambitious. In a 2021 response to the SEC’s request for public input on climate change disclosures, BPI advocated for a delay in implementation of any disclosure requirements and stated support for a less prescriptive, more voluntary approach. 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.

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.

BPI has appeared to oppose the incorporation of ESG factors into stress testing and risk management. 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 BPI 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. 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 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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