US regulators endorse efforts to address climate risks – KIRO 7 News Seattle

WASHINGTON – (AP) – U.S. financial regulators on Thursday approved a series of steps to address the threats climate change poses to the country’s financial system.

The Financial Stability Oversight Council, chaired by Treasury Secretary Janet Yellen and including Federal Reserve Chairman Jerome Powell, admitted in a report that climate change poses a serious economic threat.

“Climate-related effects in the form of warming temperatures, rising sea levels, droughts, forest fires, intensifying storms and other climate-related events already cause considerable costs for the public and the economy,” said the council’s 133-page report. “It is the responsibility of the council and its members to ensure the resilience of the financial system to climate-related risks.”

The report contains more than 30 suggestions for improving risk assessment efforts. She made recommendations on how to improve the collection of risk data and ways to ensure that the public had access to the data.

The report was released 10 days before a United Nations conference on climate change in Glasgow, Scotland. It signals the intention of the Biden government to communicate to the wider international community that it is putting together the political architecture to combat climate change and improve the resilience of financial markets.

With the United States lagging behind the European Union and the United Kingdom in responding to the economic threats posed by climate change, the government hopes to use the report to exercise more leadership on this issue.

As recommended in the report, a special advisory committee comprised of academics, Wall Street executives, business and union leaders, environmentalists and others would be set up to help develop standards for monitoring the economic effects of climate change.

The report also advises identifying and closing data gaps to assess how climate change could threaten the economy, including data sharing between the federal government and with international partners.

The Council approved the creation of two climate advisory bodies, which will report regularly to the group in order to keep officials informed of progress made.

Businesses and authorities would also have new standards for public disclosure of climate to make it easier for markets to properly weigh the effects of climate change and the potential savings from reducing these effects through measures such as the use of renewable energies.

Yellen called the changes approved by FSOC an “important first step,” but said that they by no means end the group’s efforts to better integrate climate threat assessment into the regulatory process.

The storms this summer from the forest fires in the west to Hurricane Ida along the Gulf Coast showed the need for action.

Calling climate change a “significant challenge to the global economy and financial system,” Powell said the Fed is determined to do its part in areas such as using more sophisticated analysis to better assess climate risks.

Yellen has made tackling climate change a top priority since joining the Biden government.

However, environmental groups said they were disappointed that the FSOC had not made more ambitious recommendations.

“Financial regulators can and must act to curb Wall Street’s contribution to the climate crisis,” said Ben Cushing, manager of the Sierra Club’s fossil-free finance campaign. “This report is a step in the right direction, but bolder regulatory action is needed to protect our economy from the climate crisis.”

FSOC is an umbrella body made up of the heads of the main government financial regulators. It was launched by Congress in 2010 to address serious inter-agency coordination issues exposed by the 2008 financial crisis.

The report and its recommendations were endorsed by all members of the panel except for Jelena McWilliams, head of Federal Deposit Insurance Corp., who abstained because she believed that more information was needed before a conclusion could be. McWilliams was appointed to the FDIC by then President Donald Trump.

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