US banking regulators rescind climate-risk principles for large institutions

**Three US federal banking agencies rescinded the interagency principles for climate-related financial risk management at institutions over $100 billion in assets, dated September 25, 2025. The reversal signals a divergence between US and other jurisdictions on climate risk supervision that Indian financial institutions with global operations should track. **

US federal banking regulators rescinded the interagency Principles for Climate-Related Financial Risk Management, withdrawing guidance originally published in the Federal Register on October 30, 2023. The rescission notice was dated September 25, 2025 and came jointly from the OCC, the Board of Governors and the Federal Deposit Insurance Corporation. The principles applied to institutions managing over $100 billion in total consolidated assets. Agencies concluded separate climate-related principles were not required, stating that existing safety and soundness standards already mandate risk management commensurate with each institution's size, complexity and risk profile.

Large US financial institutions managing over $100 billion in consolidated assets are directly affected, with the OCC having already withdrawn its participation earlier in the year through a separate statement. The rescission does not prohibit institutions from continuing to consider climate risk; it removes the dedicated interagency guidance and folds climate into general risk management. Indian banks and financial institutions with US operations or US counterparties should note the policy divergence, as the US moves away from standalone climate-risk supervision while other jurisdictions maintain dedicated frameworks.

Indian financial institutions with US exposure or global reporting obligations should monitor how this rescission affects cross-border supervisory expectations and whether it widens divergence with EU and RBI-aligned climate risk approaches. Affected entities should note that current US safety-and-soundness rules still require addressing all material and emerging risks. Institutions should track whether the integrated approach changes counterparty disclosure expectations, while recognising the rescission removes specific climate guidance but does not bar continued voluntary climate risk consideration.

Key figure — Threshold for rescinded principles: institutions over $100 billion in total consolidated assets