BILL NUMBER: S5132
SPONSOR: HARCKHAM
 
TITLE OF BILL:
An act to amend the financial services law, in relation to requiring
certain corporations to annually prepare a climate-related financial
risk report for submission to the secretary of state and to make such
report available to the public
 
PURPOSE:
To require financial institutions to prepare and publish climate risk
disclosure reports.
 
SUMMARY OF PROVISIONS:
Section 1 states the legislative intent.
Section 2 adds new section 312 to define climate related risks, report-
ing, and covered entities. These entities shall not only integrate
financial risks stemming from climate change into their risk management
process, but shall appoint a climate risk designee to evaluate specific
risk factors (i.e. credit and market risk). Covered entities must
prepare annual climate financial risk reports and submit them to the
Secretary of State and publish for public review.
Section 3 states the effective date.
 
JUSTIFICATION:
Climate change is not only affecting New York's environment and communi-
ties but has various associated impacts on our global economy.
These impacts are expected to accelerate in coming decades unless
aggressive action is taken both to reduce greenhouse gas emissions and
to adapt New York's environments, communities and economy. Global
economic and climate policy leaders have conclusively established that
the long-term strength of global and local economies will depend on
their ability to withstand the climate change-related risks including
physical impacts, economic transitions, and policy and legal responses,
Failure of economic actors to adequately plan for and adapt to climate
change-related risks to their businesses and to the economy will result
in significant harm to New York and to individual residents and inves-
tors, in particular to financially vulnerable New York residents who are
employed by, live in communities reliant on, or have invested in or
obtained financing from these institutions.
New York is a global leader in addressing the causes of climate change
and its impacts. In recent years, the state has enacted multiple legis-
lative measures, including The Climate Leadership and Community
Protection Act of 2019 to limit statewide greenhouse gas emissions to
60% of 1990 levels by 2030 and 15% by 2050, the formation of the New
York state Climate Action Council and the Climate Justice Working Group
in 2019, and enacting the 2021 Soil Health and Climate Resiliency Act
that encourages management and optimization of soil health to mitigate
and adapt to climate change.
Leading voluntary initiatives have begun to develop frameworks for
disclosure of climate change- and sustainability-related information,
including the Financial Stability Board's Task Force on Climate-Related
Financial Disclosures and the Sustainability Accounting Standards Board.
The Department of Financial Services (DFS) has kickstarted this initi-
ative by rolling out expectations of climate risk disclosure. New York
must follow suit to other jurisdictions who have begun to clearly
require private and public entities to develop and disclose sustainabil-
ity policies, i.e. Illinois' Sustainable Investing Act and France's
Energy Transition Law Article 173.
Given business and financial institutions' contributions to climate
change and vulnerability to its impacts on New York and the broader
economy and the state's leadership in analyzing, addressing, and miti-
gating climate risks, it is in New Yorkers' best interest to require
disclosure of climate-related risks and risk-reduction strategies.
 
LEGISLATIVE HISTORY:
2023-2024: S5437/A10503 - Died in Insurance/Died in Corporations,
Authorities. And Commissions
 
FISCAL IMPLICATIONS:
Minimal.
 
EFFECTIVE DATE:
This act shall take effect immediately.