A10503 Summary:

BILL NOA10503
 
SAME ASSAME AS S05437
 
SPONSORRules (Otis)
 
COSPNSR
 
MLTSPNSR
 
Add §312, Fin Serv L
 
Requires certain corporations authorized to operate in the state and subject to the supervision of the department of financial services that had annual gross revenues of at least five hundred million dollars ($500,000,000) in the prior calendar year 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.
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A10503 Actions:

BILL NOA10503
 
05/29/2024referred to corporations, authorities and commissions
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A10503 Committee Votes:

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A10503 Floor Votes:

There are no votes for this bill in this legislative session.
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A10503 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10503
 
SPONSOR: Rules (Otis)
  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.   DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE): n/a   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: This is a new bill.   FISCAL IMPLICATIONS: To be determind.   EFFECTIVE DATE: This act shall take effect immediately.
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A10503 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          10503
 
                   IN ASSEMBLY
 
                                      May 29, 2024
                                       ___________
 
        Introduced  by  COMMITTEE  ON  RULES -- (at request of M. of A. Otis) --
          read once and referred to the Committee on  Corporations,  Authorities
          and Commissions
 
        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
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1. Legislative intent. The legislature finds and declares all
     2  of the following:
     3    (a) Climate change is affecting New York's  environment,  communities,
     4  and  economy  with  impacts including wildfires, sea level rise, extreme
     5  weather events, extreme droughts, and associated impacts to  the  global
     6  economy.
     7    (b)  These impacts are expected to accelerate in coming decades unless
     8  aggressive action is taken both to reduce greenhouse gas  emissions  and
     9  to adapt New York's environments, communities and economy.
    10    (c)  Global  economic  and  climate  policy  leaders have conclusively
    11  established that the long-term strength of global  and  local  economies
    12  will  depend  on  their  ability to withstand the climate change-related
    13  risks including physical impacts, economic transitions, and  policy  and
    14  legal responses.
    15    (d)  Failure  of  economic  actors to adequately plan for and adapt to
    16  climate change-related risks to their businesses and to the economy will
    17  result in significant harm to New York and to individual  residents  and
    18  investors,  in  particular  to financially vulnerable New York residents
    19  who are employed by, live in communities reliant on or have invested  in
    20  or obtained financing from these institutions.
    21    (e)  New  York  is a global leader in addressing climate change causes
    22  and impacts. In recent years, the state has enacted multiple legislative
    23  measures,  including  enacting  The  Climate  Leadership  and  Community
    24  Protection Act of 2019 that limits statewide greenhouse gas emissions to
    25  60%  of  1990  levels  by 2030 and 15% by 2050, the formation of the New
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD09976-01-3

        A. 10503                            2
 
     1  York state Climate Action Council and the Climate Justice Working  Group
     2  in  2019,  and  enacting the 2021 Soil Health and Climate Resiliency Act
     3  that encourages management and optimization of soil health  to  mitigate
     4  and adapt to climate change.
     5    (f) Leading voluntary initiatives have begun to develop frameworks for
     6  disclosure  of  climate  change- and sustainability-related information,
     7  including the Financial Stability Board's Task Force on  Climate-Related
     8  Financial Disclosures and the Sustainability Accounting Standards Board.
     9    (g) Other jurisdictions have begun to require private and public enti-
    10  ties  to  develop  and disclose sustainability policies, including Illi-
    11  nois' Sustainable Investing Act and France's Energy Transition Law Arti-
    12  cle 173.
    13    (h)  Given  business  and  financial  institutions'  contributions  to
    14  climate  change  and  vulnerability  to  its impacts on New York and the
    15  broader economy and the state's leadership in analyzing, addressing, and
    16  mitigating climate risks, it is in the interest of the state to  require
    17  disclosure of climate-related risks and risk-reduction strategies.
    18    § 2. The financial services law is amended by adding a new section 312
    19  to read as follows:
    20    § 312. Climate-related financial risk and required disclosures.  1. As
    21  used in this section:
    22    (a)  "Climate-related  financial  risk" means material risk of harm to
    23  immediate and  long-term  financial  outcomes  due  to  climate  change,
    24  including,  but not limited to, risks to corporate operations, provision
    25  of goods and services, real estate, supply chains, employee  health  and
    26  safety,  capital  and  financial investments, institutional investments,
    27  financial standing of loan recipients and borrowers, shareholder  value,
    28  insured  assets,  consumer  demand,  and  financial markets and economic
    29  health.
    30    (b) "Climate-related financial risk report" means a report required by
    31  subdivision two of this section.
    32    (c) "Covered entity" means a corporation, partnership, limited liabil-
    33  ity company, or other business entity incorporated, formed, or issued  a
    34  license  to  operate  or  certificate of authority under the laws of the
    35  state and subject to the supervision of the department that  had  annual
    36  gross  revenues  of at least five hundred million dollars ($500,000,000)
    37  in the prior calendar year.
    38    2. Each covered  entity  shall  integrate  the  financial  risks  from
    39  climate  change  in its risk management processes, governance frameworks
    40  and business strategies.   During  this  process,  each  covered  entity
    41  should  take  a proportionate approach that reflects its exposure to the
    42  financial risks from climate change and the nature, scale and complexity
    43  of its business.
    44    (a) Department-regulated banking  and  depository  institutions  shall
    45  designate a board member, a committee of the board, or members of senior
    46  management  as accountable for the organization's assessment and manage-
    47  ment of the financial risks from climate  change.  Such  entities  shall
    48  conduct  an  enterprise-wide  risk assessment to evaluate climate change
    49  and its impacts on risk factors,  such  as  credit  risk,  market  risk,
    50  liquidity  risk, operational risk, reputational risk, and strategy risk.
    51  Each such covered entity shall develop its approach  to  climate-related
    52  financial  risk disclosure and consider engaging with the Task Force for
    53  Climate-Related Financial Disclosures framework  and  other  established
    54  initiatives when doing so.
    55    (b) Non-depository covered entities shall conduct a comprehensive risk
    56  assessment  of  the  physical  and  transition  risks of climate change,

        A. 10503                            3
 
     1  whether directly impacting the entity, or indirectly impacting it due to
     2  the disruptive consequences of climate  change  in  the  communities  it
     3  serves  and  on  its customers, such as business disruptions, out-migra-
     4  tions,   loss   of   income  and  higher  default  rates,  supply  chain
     5  disruptions, and changes in investor and consumer sentiments, and  start
     6  developing  strategic  plans,  including  an  outline of such risks, the
     7  impact on their balance sheets, and steps to be taken to  mitigate  such
     8  risks.
     9    3.  (a)  On or before December thirty-first, two thousand twenty-four,
    10  and annually thereafter, each covered entity shall prepare a climate-re-
    11  lated financial risk report disclosing both of the following:
    12    (1) its climate-related financial risk, in accordance with the  recom-
    13  mended framework and disclosures contained in the Final Report of Recom-
    14  mendations  of  the  Task Force on Climate-Related Financial Disclosures
    15  (June 2017) or any successor thereto; and
    16    (2) its measures adopted to reduce and adapt to climate-related finan-
    17  cial risk disclosed pursuant to subparagraph one of this paragraph.
    18    (b) On or before December thirty-first, two thousand twenty-four,  and
    19  annually thereafter, each covered entity shall do both of the following:
    20    (1) submit to the secretary of state, and make available to the public
    21  on  its  own  internet  website,  a  copy of the report required by this
    22  section; and
    23    (2) submit to the secretary of state a statement affirming, not  under
    24  penalty  of perjury, that the report prepared and filed pursuant to this
    25  section discloses climate-related  financial  risk  in  accordance  with
    26  subparagraph one of paragraph (a) of this subdivision.
    27    4.  The department shall make available to the public, on its internet
    28  website,  all  climate-related  financial  risk  reports  obtained  from
    29  covered entities.
    30    § 3. This act shall take effect immediately.
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