FOR IMMEDIATE RELEASE
Tuesday, November 2, 2021
Contact: Evelyn Swan at 202-618-6433 or [email protected]
WASHINGTON, D.C.— Today, Phillip Basil, Director of Banking Policy at Better Markets, issued the following statement regarding the publication of our new report, Climate Change and the Banking System:
“As world governments debate national commitments to address the global climate change crisis at the COP26 conference in Glasgow, Better Markets has published a report that outlines actions the U.S. banking regulatory agencies should take ASAP to address the material risks to the banking system from climate change. The report also reviews the insufficient commitments of the largest banks, which supports the need for banking regulators to take concrete action.
“The fallout from extreme weather disasters or other climate-related effects could be catastrophic to the economy and people’s livelihoods, leading to a restructuring of the global economy and financial system. To date, banks have not been doing enough to manage and account for the risks of climate change or to support the transition towards a more sustainable economy.
“The U.S. regulatory agencies remain woefully behind in managing and addressing climate-related risks in the banking system. The Fed, which is best suited to meaningfully address these risks, must lead efforts to incorporate climate risks into bank supervision and regulation, in collaboration with the other agencies.
“Addressing the potentially destabilizing risks from climate change clearly fall within the mandates of the agencies, which are to promote a strong banking system and to work to maintain financial stability. Climate risks should be incorporated into the supervisory process and final supervisory ratings, using robust data collection, scenario analysis, and disclosures to enhance the understanding of those risks for both the agencies and the public. Additionally, regulations should be in place that introduce capital requirements and restrict certain fossil fuel-related activities.
“Climate change threatens to upend the global social and economic order and can impact virtually every aspect of the economy and financial system. The Fed – along with the other regulatory agencies and FSOC – have to start taking those threats seriously and must act now to ensure the resiliency of our banking system and stability of the financial system as a whole.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
