US FHFA Joins Network to Green the Financial System – Financial Services

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On May 11, 2022, the US Federal Housing Finance Agency (“FHFA”) announced that it had joined the Network of Central Banks and Supervisors for Greening the Financial System (“NGFS”).1 The FHFA is the latest US regulator to join the NGFS, and its membership is part of a trend of US regulators joining the NGFS since President Biden’s election in November 2020.2 In this Legal Update we provide background on the NGFS and FHFA climate initiatives and discuss what membership of NGFS can mean for the FHFA.


NGFS is a global, voluntary organization made up of central banks and financial regulators. NGFS was founded in December 2017 at the Paris One Planet Summit to define, promote and contribute to the development of practices inside and outside NGFS and to conduct or commission analytical work on green finance. Members share best practices, ideas and research on environmental and climate risk management in the financial sector.

The FHFA regulates several of the US Government sponsored housing associations (“GSEs”) and the home finance markets generally in the United States. Since early 2021, the FHFA has been addressing climate-related financial risks, notably by issuing a call for opinion on the risks of climate change and natural disasters for national housing finance markets.3 While it has not enacted any regulations to address these risks,4 it has pledged to work with other U.S. regulators and the entities it regulates, such as when it asked GSEs to prioritize climate change and actively consider its impacts in their decision-making.5 It has also added resilience to climate risk as one of the criteria it uses to rate the safety and soundness of Fannie Mae and Freddie Mac.

consequences of joining

Joining the NGFS does not mean that the FHFA immediately imposes new obligations on the GSEs. Other US regulators that have joined the NGFS, such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, have not yet explicitly adopted any of the NGFS best practices as requirements for US financial institutions. This is true even in areas where there is strong alignment between NGFS initiatives and US regulatory practices, such as in relation to stress testing and scenario analysis.

However, it is likely that the FHFA will collaborate with the NGFS on several of its initiatives. For example, NGFS has taken a leading role in developing scenarios capable of modeling the impact of climate change on various financial activities. One could imagine that the FHFA would consider the NGFS scenarios as a starting point to include climate-related financial risks in the FHFA’s annual stress tests.6 Additionally, NGFS is currently evaluating how it can help develop resources and fill potential gaps in climate data.7 The FHFA, which sits at the center of US housing markets, appears to have both data resources and data needs that it could contribute to the NGFS effort. Market participants in the housing sector should consider becoming familiar with NGFS and its initiatives so that they can provide informed and constructive feedback to the FHFA.


1. press release, FHFA announces membership of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) (11 May 2022),

2. See our Legal Update on the start of this trend: -and-regulators-for-the-greening-of-the-financial-system.

3. See our legal update on the prompt: changes-und -natural catastrophe risks.

4. For more information on this aspect of the FHFA’s activities, see our blog post on its strategic plan: /.

5. See our Legal Update on this Encouragement Statement:

6. SeeFHFA, Dodd Frank Act Stress Tests (DFAST) (March 10, 2022).

7. See our Legal Update on the NGFS Information Request: -directory .

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This article by Mayer Brown provides information and commentary on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should obtain legal advice before taking any action with respect to any matter discussed herein.

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