STATEMENT: US Financial Regulators Should Address Climate Risks That Threaten to Destabilize Our Economy
Environmental organizations among committee that developed first-ever federal report on climate threat to US financial stability.
This morning, the Commodity Futures Trading Commission released the report Managing Climate Risk in the U.S. Financial System.
This report—the first from the auspices of a financial regulator to look at such risks to the financial system specifically in the context of the United States—was prepared by a subcommittee convened by the CFTC and comprised of diverse stakeholders. These included major banks, asset managers and asset owners and leading firms in agriculture, oil and gas, and financial services, as well as members of the environmental research community.
These risks stem from the impacts of climate change causing persistent damage to infrastructure, housing, crops, communities, and livelihoods, and therefore to the value of financial assets. Financial institutions continue to ignore these risks through their unwillingness to quickly adapt to changing technology, consumer preferences, and regulation in the face of a transition to a net-zero-carbon future.
Numerous recommendations for addressing climate-related risks to financial stability are included in the report.
Following is a statement from Ceres, Environmental Defense Fund, OS-Climate, The Nature Conservancy and World Resources Institute:
“The central message of this report is that U.S. financial regulators must act on the serious emerging risks climate change poses to the U.S. financial system.
Make no mistake: This report merely recognizes what not only we but leading academics, private sector leaders, and peer regulators around the world already know: U.S. financial regulators should move urgently and decisively to measure, understand, and address climate risks.
Left unaddressed, these risks will undermine the financial system’s capacity to serve and support America’s economy. What is needed now is action from financial regulators, who under existing legislation already possess wide-ranging, flexible authority to address climate-related financial risk.
Later will be too late.”