S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5437
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               March 3, 2023
                                ___________
 
 Introduced  by Sen. HARCKHAM -- read twice and ordered printed, and when
   printed to be committed to the Committee on Banks
 
 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:
 
   Section 1. Legislative intent. The legislature finds and declares  all
 of the following:
   (a)  Climate  change is affecting New York's environment, communities,
 and economy with impacts including wildfires, sea  level  rise,  extreme
 weather  events,  extreme droughts, and associated impacts to the global
 economy.
   (b) 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.
   (c) 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.
   (d) 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
 investors, 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.
   (e) New York is a global leader in addressing  climate  change  causes
 and impacts. In recent years, the state has enacted multiple legislative
 measures,  including  enacting  The  Climate  Leadership  and  Community
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD09976-01-3
              

 S. 5437                             2
 
 Protection Act of 2019 that limits 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.
   (f) 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.
   (g) Other jurisdictions have begun to require private and public enti-
 ties  to  develop  and disclose sustainability policies, including Illi-
 nois' Sustainable Investing Act and France's Energy Transition Law Arti-
 cle 173.
   (h)  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
 mitigating climate risks, it is in the interest of the state to  require
 disclosure of climate-related risks and risk-reduction strategies.
   § 2. The financial services law is amended by adding a new section 312
 to read as follows:
   § 312. CLIMATE-RELATED FINANCIAL RISK AND REQUIRED DISCLOSURES.  1. AS
 USED IN THIS SECTION:
   (A)  "CLIMATE-RELATED  FINANCIAL  RISK" MEANS MATERIAL RISK OF HARM TO
 IMMEDIATE AND  LONG-TERM  FINANCIAL  OUTCOMES  DUE  TO  CLIMATE  CHANGE,
 INCLUDING,  BUT NOT LIMITED TO, RISKS TO CORPORATE OPERATIONS, PROVISION
 OF GOODS AND SERVICES, REAL ESTATE, SUPPLY CHAINS, EMPLOYEE  HEALTH  AND
 SAFETY,  CAPITAL  AND  FINANCIAL INVESTMENTS, INSTITUTIONAL INVESTMENTS,
 FINANCIAL STANDING OF LOAN RECIPIENTS AND BORROWERS, SHAREHOLDER  VALUE,
 INSURED  ASSETS,  CONSUMER  DEMAND,  AND  FINANCIAL MARKETS AND ECONOMIC
 HEALTH.
   (B) "CLIMATE-RELATED FINANCIAL RISK REPORT" MEANS A REPORT REQUIRED BY
 SUBDIVISION TWO OF THIS SECTION.
   (C) "COVERED ENTITY" MEANS A CORPORATION, PARTNERSHIP, LIMITED LIABIL-
 ITY COMPANY, OR OTHER BUSINESS ENTITY INCORPORATED, FORMED, OR ISSUED  A
 LICENSE  TO  OPERATE  OR  CERTIFICATE OF AUTHORITY UNDER THE LAWS OF THE
 STATE AND SUBJECT TO THE SUPERVISION OF THE DEPARTMENT THAT  HAD  ANNUAL
 GROSS  REVENUES  OF AT LEAST FIVE HUNDRED MILLION DOLLARS ($500,000,000)
 IN THE PRIOR CALENDAR YEAR.
   2. EACH COVERED  ENTITY  SHALL  INTEGRATE  THE  FINANCIAL  RISKS  FROM
 CLIMATE  CHANGE  IN ITS RISK MANAGEMENT PROCESSES, GOVERNANCE FRAMEWORKS
 AND BUSINESS STRATEGIES.   DURING  THIS  PROCESS,  EACH  COVERED  ENTITY
 SHOULD  TAKE  A PROPORTIONATE APPROACH THAT REFLECTS ITS EXPOSURE TO THE
 FINANCIAL RISKS FROM CLIMATE CHANGE AND THE NATURE, SCALE AND COMPLEXITY
 OF ITS BUSINESS.
   (A) DEPARTMENT-REGULATED BANKING  AND  DEPOSITORY  INSTITUTIONS  SHALL
 DESIGNATE A BOARD MEMBER, A COMMITTEE OF THE BOARD, OR MEMBERS OF SENIOR
 MANAGEMENT  AS ACCOUNTABLE FOR THE ORGANIZATION'S ASSESSMENT AND MANAGE-
 MENT OF THE FINANCIAL RISKS FROM CLIMATE  CHANGE.  SUCH  ENTITIES  SHALL
 CONDUCT  AN  ENTERPRISE-WIDE  RISK ASSESSMENT TO EVALUATE CLIMATE CHANGE
 AND ITS IMPACTS ON RISK FACTORS,  SUCH  AS  CREDIT  RISK,  MARKET  RISK,
 LIQUIDITY  RISK, OPERATIONAL RISK, REPUTATIONAL RISK, AND STRATEGY RISK.
 EACH SUCH COVERED ENTITY SHALL DEVELOP ITS APPROACH  TO  CLIMATE-RELATED
 FINANCIAL  RISK DISCLOSURE AND CONSIDER ENGAGING WITH THE TASK FORCE FOR
 CLIMATE-RELATED FINANCIAL DISCLOSURES FRAMEWORK  AND  OTHER  ESTABLISHED
 INITIATIVES WHEN DOING SO.
 S. 5437                             3
 
   (B) NON-DEPOSITORY COVERED ENTITIES SHALL CONDUCT A COMPREHENSIVE RISK
 ASSESSMENT  OF  THE  PHYSICAL  AND  TRANSITION  RISKS OF CLIMATE CHANGE,
 WHETHER DIRECTLY IMPACTING THE ENTITY, OR INDIRECTLY IMPACTING IT DUE TO
 THE DISRUPTIVE CONSEQUENCES OF CLIMATE  CHANGE  IN  THE  COMMUNITIES  IT
 SERVES  AND  ON  ITS CUSTOMERS, SUCH AS BUSINESS DISRUPTIONS, OUT-MIGRA-
 TIONS,  LOSS  OF  INCOME  AND  HIGHER  DEFAULT   RATES,   SUPPLY   CHAIN
 DISRUPTIONS,  AND CHANGES IN INVESTOR AND CONSUMER SENTIMENTS, AND START
 DEVELOPING STRATEGIC PLANS, INCLUDING AN  OUTLINE  OF  SUCH  RISKS,  THE
 IMPACT  ON  THEIR BALANCE SHEETS, AND STEPS TO BE TAKEN TO MITIGATE SUCH
 RISKS.
   3. (A) ON OR BEFORE DECEMBER THIRTY-FIRST, TWO  THOUSAND  TWENTY-FOUR,
 AND ANNUALLY THEREAFTER, EACH COVERED ENTITY SHALL PREPARE A CLIMATE-RE-
 LATED FINANCIAL RISK REPORT DISCLOSING BOTH OF THE FOLLOWING:
   (1)  ITS CLIMATE-RELATED FINANCIAL RISK, IN ACCORDANCE WITH THE RECOM-
 MENDED FRAMEWORK AND DISCLOSURES CONTAINED IN THE FINAL REPORT OF RECOM-
 MENDATIONS OF THE TASK FORCE ON  CLIMATE-RELATED  FINANCIAL  DISCLOSURES
 (JUNE 2017) OR ANY SUCCESSOR THERETO; AND
   (2) ITS MEASURES ADOPTED TO REDUCE AND ADAPT TO CLIMATE-RELATED FINAN-
 CIAL RISK DISCLOSED PURSUANT TO SUBPARAGRAPH ONE OF THIS PARAGRAPH.
   (B)  ON OR BEFORE DECEMBER THIRTY-FIRST, TWO THOUSAND TWENTY-FOUR, AND
 ANNUALLY THEREAFTER, EACH COVERED ENTITY SHALL DO BOTH OF THE FOLLOWING:
   (1) SUBMIT TO THE SECRETARY OF STATE, AND MAKE AVAILABLE TO THE PUBLIC
 ON ITS OWN INTERNET WEBSITE, A COPY  OF  THE  REPORT  REQUIRED  BY  THIS
 SECTION; AND
   (2)  SUBMIT TO THE SECRETARY OF STATE A STATEMENT AFFIRMING, NOT UNDER
 PENALTY OF PERJURY, THAT THE REPORT PREPARED AND FILED PURSUANT TO  THIS
 SECTION  DISCLOSES  CLIMATE-RELATED  FINANCIAL  RISK  IN ACCORDANCE WITH
 SUBPARAGRAPH ONE OF PARAGRAPH (A) OF THIS SUBDIVISION.
   4. THE DEPARTMENT SHALL MAKE AVAILABLE TO THE PUBLIC, ON ITS  INTERNET
 WEBSITE,  ALL  CLIMATE-RELATED  FINANCIAL  RISK  REPORTS  OBTAINED  FROM
 COVERED ENTITIES.
   § 3. This act shall take effect immediately.