As climate change becomes more of a topline issue, it is important for the industry to understand its impacts and to develop standardized disclosures that are essential to well-functioning markets. The challenges posed by the climate crisis demand engagement and cooperation across sectors and amongst stakeholders with diverse interests. Â
This essay offers a high-level overview of the critical issues and actions that industry participants can take now — voluntarily at the firm level and collectively through engagement in public policy — to address the risks at hand and ahead as they continue to fulfill a vital role in financing America’s housing needs into a sustainable lower carbon future.Â
It also addresses the importance of the government and private sector working together toward innovative solutions and outlines the two domains of action. Finally, the essay highlights three major systemic policy issues that will be consequential for all housing finance stakeholders: uniform disclosures and data standards, the risks of disorderly transition, and the impact of climate change on the nation’s worsening affordable housing challenge.Â
Key takeaways include:Â
The housing and mortgage industries have a central and outsized role in mitigating the risks of climate change and financing the transition to a sustainable future. Â
Managing climate-related risks, ensuring equitable access to credit, and meeting the nation’s pressing housing needs are linked to systemic challenges.Â
Climate risks cannot be addressed by either government or the private sector alone, both must work together toward bold and innovative solutions.Â
All mortgage originators have opportunities to raise borrowers’ awareness of climate-related risks and increase access to financing for improvements that make homes more resilient and sustainable.Â