Ceres Welcomes New Legislation Strengthening Regulatory Oversight of Climate Change Risks

The nonprofit sustainability organization Ceres welcomes new legislation from Sen. Brian Schatz (D-HI) that would mandate stress tests for large financial institutions to measure their resilience to climate-related risks. 

“Climate change poses significant financial risks to the stability of capital markets, and U.S. financial regulators are currently not doing enough to quantify and manage those risks,” said Ceres CEO and President Mindy Lubber. 

The legislation, known as the Climate Change Financial Risk Act, would require the Federal Reserve Board to establish an advisory group of climate scientists and climate economists to help develop climate change scenarios for financial stress tests that will allow regulators to quantify how risks from climate changes would disrupt the economy and global business operations.

Greenhouse gas (GHG) emissions are at an all-time high and continue to rise, warming the planet at a rapid rate. Scientists warn that we must act now to limit average global temperature rise to no more than 1.5 degrees Celsius, if we are to mitigate the worst impacts of climate change.

Lubber added: 

“Ceres commends Sen. Schatz for this legislation and for setting a clear role for the Federal Reserve Board to engage on climate change. Major investors and companies from across sectors are taking action to reduce their own GHG emissions, but progress is not happening fast enough. This proposal will provide the clarity and analysis needed to help the financial industry make smart decisions to accelerate the transition to a low-carbon economy.”