The New York State Department of Financial Services (NYDFS) on Wednesday announced the creation of a new Climate Risk Division to oversee regulated entities’ efforts at managing the financial risks of climate change.

The division is the first of its kind at a U.S. state banking regulator, the NYDFS noted in its press release. Yue (Nina) Chen will lead the unit as executive deputy superintendent.

“As one of the most critical issues of our generation, climate change poses wide-ranging and material risks to the financial system,” said Acting NYDFS Superintendent Adrienne Harris in the release. “This new division and Nina’s appointment position DFS at the forefront of climate-related financial supervision, fulfilling DFS’ mandate to ensure the safety and soundness of our regulated companies as they manage the financial risks from climate change and support the roles of our institutions in advancing the low-carbon transition and enhancing communities’ resilience.”

Chen, who has been the NYDFS’s inaugural director of sustainability and climate initiatives since May 2020, previously served as the director of conservation investments at the Nature Conservancy in New Jersey and New York. She has worked for Goldman Sachs and Royal Bank of Canada in areas as varied as sovereign bonds, interest rates derivatives, mortgages, and structured credit products.

The NYDFS’s new Climate Risk Division “will integrate climate risks into its supervision of regulated entities; support the industry’s growth in managing climate risks; coordinate with international, national, and state regulators; develop internal capacity on climate-related financial risks; support the capacity building of peer regulators on climate-related supervision; and ensure fair access to financial services for all communities, especially those most impacted by climate change,” the regulator said.

Since September 2020, the NYDFS has published several guidance letters for regulated entities recommending they “integrate the consideration of the financial risks from climate change into their governance frameworks, risk management processes, and business strategies and develop their approach to climate-related financial disclosure.”

The developments are in line with a growing trend among federal regulators to require regulated entities to quantify and disclose risks posed to their finances by climate change. The Financial Stability Oversight Council released a report last month identifying climate change as “an emerging and increasing threat to U.S. financial stability.” The report was requested by President Joe Biden as part of an executive order on climate-related financial risk in May.

The Securities and Exchange Commission (SEC) has indicated it will evaluate its rules on climate change-related disclosures, requesting public comment on the matter. The SEC and Commodity Futures Trading Commission have each established units specifically focused on climate-related issues.