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Stamford-based Webster Bank has joined four other regional banks as part of a new consortium focused on the risks banks face related to climate change.
The consortium was launched by the Risk Management Association, a Philadelphia-based professional association that promotes sound risk management principles in the financial services industry.
The RMA said in a statement yesterday that it was strengthening its commitment to advancing climate risk management in the financial industry by forming the RMA Regional Bank Climate Risk Consortium. Like a similar group launched last year for large banks, the consortium will bring together financial institutions “to create guidelines for embedding climate in risk management practices throughout the three lines of defense and preparing the industry to help economies transition to a low-carbon future,” the statement said.
The large bank consortium has 28 international members, including TD Bank Group, which recently joined, and founding members KeyBank, M&T Bank, Bank of America and Wells Fargo. The regional bank consortium launched with five members, including Webster Bank and Utah-based Zions Bancorporation.
“At Webster, we are dedicated to being a responsible corporate citizen, including proactively managing risk around climate change,” Jason Soto, Webster Bank’s chief credit officer, said in RMA’s statement. “We look forward to joining our fellow financial services organizations in working with the RMA Regional Bank Climate Risk Consortium as it defines strategies and measurable outcomes within our region.”
The consortium for larger institutions, known as the RMA Climate Risk Consortium, has prioritized three topics, the RMA said, and formed working groups covering governance, scenario analysis and data quality.
The governance working group’s tasks include developing frameworks and standards for strategy, policy and enterprise risk challenges, while the scenario analysis group is working on addressing issues related to the impact scenario analysis has on credit analytics and underwriting. The data quality group is looking into how banks can have “climate competent, data-driven conversations with clients,” the statement said
The RMA in its statement pointed to last year’s report from the UN Intergovernmental Panel on Climate Change warning that climate change is occurring more rapidly and causing more severe impacts than anticipated.
“The IPCC report is a stark reminder that action is needed now to mitigate and respond to the profound challenges brought by a warming climate,” RMA President and CEO Nancy Foster said. “A financial industry that is proactively addressing this transition is critical and we are committed to helping the industry through education and community.”
Foster added that the climate risk management resources and practices being developed by RMA’s consortia would help financial institutions “maintain strength and resilience to carry out their crucial economic role.”
