Affirmation comes days after Federal Reserve Chairman Powell confirms agency's responsibility to protect against systemic risk of climate change
The U.S. Federal Reserve included climate change in a list of key risks to U.S. financial stability today, in what Steven M. Rothstein, Managing Director of the Ceres Accelerator for Sustainable Capital Markets calls "a dramatic step toward tackling climate change as a systemic financial risk.”
Federal Reserve Governor Lael Brainard warned in comments attached to a biannual financial stability report that “increases in mean temperatures or sea levels, or a gradual change in investor sentiment about those risks, introduce the possibility of abrupt tipping points or significant swings in sentiment."
Governor Brainard's words come days after Federal Reserve Chairman Jerome Powell affirmed that the Federal Reserve has a responsibility to protect against the systemic risk of climate change to U.S. markets.
“The public will expect and has every right to expect that in our oversight of the financial system we will account for all material risks and try to protect the economy and the public from those risks," Chairman Powell said last week. "Climate change is one of those risks."
Rothstein continued: "Financial regulators have a clear responsibility to protect our markets from the systemic threat of climate change, and we commend both Governor Brainard and Chairman Powell and the entire Federal Reserve system for their clear-eyed willingness to affirm that responsibility. There is a new age dawning in the fight against climate change, and we are hopeful that it will include robust financial regulation. The first step is affirmation, then building climate change into prudential regulation is a critical next step. We applaud these regulators for their leadership, and look forward to working with them to tackle these systemic risks.”
The Ceres Accelerator for Sustainable Capital Markets released in June a sweeping report that recommends more than 50 action steps financial regulators can take to protect against climate change as a systemic financial risk—all of which fall within the agencies' existing mandate. That report has been endorsed by investors with more than $1 trillion in assets under management, as well as companies, former and current regulators, and lawmakers.
About Ceres Accelerator for Sustainable Capital Markets
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Through powerful networks and advocacy, Ceres tackles the world’s biggest sustainability challenges, including the climate crisis, water scarcity and pollution, and inequitable workplaces. The Ceres Accelerator for Sustainable Capital Markets is a center within Ceres. The Ceres Accelerator works to transform the practices and policies that govern capital markets in order to reduce the worst financial impacts of the climate crisis, and spurs capital market influencers to act on climate change as a systemic financial risk—driving the large-scale behavior and systems change needed to achieve a just and sustainable future, and a net-zero emissions economy. For more information, visit ceres.org/accelerator and follow @CeresNews.