Climate change threatens to upend the global social and economic order and can impact virtually every aspect of the economy and financial system. The risks from climate change to the banking and financial system must be appropriately addressed now.

The U.S. banking regulatory agencies remain woefully behind in addressing climate-related risks. Their counterparts at the European Central Bank and the UK’s Prudential Regulation Authority formally have kicked off scenario analysis processes, have started official assessments of banks’ ability to address climate risks and are considering the possibility of capital requirements. Certainly the U.S. agencies should at least be pursuing the same efforts now as a start but doing even more, as we say in our recent report.

The Federal Reserve, as the regulatory agency over bank  holding companies, is best suited to meaningfully address these risks and must lead efforts to incorporate climate risks into bank supervision and regulation, in collaboration with the other agencies.

Looking ahead to Chair Jerome Powell’s second term at the Federal Reserve, Better Markets’ Director of Banking Policy sat down with Yahoo! Finance LIVE to discuss how the Fed will address the risks of climate change on the banking system and economy.