There is widespread, mainstream, consensus from Washington to Wall Street and beyond that climate change poses serious and dangerous risks to the financial system and the economy. They may have different ideas about how and how fast to address those risks, but they agree on the risks and that they must be addressed.

Why It Matters. Out-of-the-mainstream extremists—including U.S. Senators—are pushing for the Fed to ignore its legal requirement to supervise and regulate climate-related risks for the benefit of the fossil fuel industry. Such a political directive to the Fed to not consider certain risks would not only politicize the Fed and undermine its independence, but it would also risk repeating the type of catastrophic effects experienced after a political prohibition from considering the risks of derivatives ignited and intensified the 2008 Financial Crisis.

What We Said. Just as with any other risk, it is essential for the Fed to address climate-related financial risks to ensure it protects the safety and soundness of U.S. banks and promotes the stability of our financial system, as it is mandated to do. That is the Fed’s legal duty, which is supported by a deep and broad mainstream consensus.

Bottom Line. If climate-related risks are ignored in much the same way the financial risks of derivatives were ignored in the early 2000s, we run the risk, once again, of an unregulated risk building and causing serious, long-term damage to the standard of living, the quality of life, and the livelihoods of Main Street Americans.

Read our full Fact Sheet here or click the button below. Read the Press Release here.

To keep up to date on our work in climate, see our article Better Markets’ Work Addressing Climate Change in Finance