40 Investors With Nearly $1 Trillion Join Other Leaders to Urge U.S. Financial Regulators to Act on Climate Change As a Systemic Financial Risk

July 21, 2020 /3BL Media/ - On the 10-year anniversary of The Dodd–Frank Wall Street Reform and Consumer Protection Act, a broad-based, bipartisan collection of investors, businesses, former regulators, politicians, and nonprofit leaders urged Federal Reserve Chairman Jerome Powell and other leaders of key financial regulatory agencies to take immediate action to address climate change as a systemic financial risk. 

The 72 signatories, including investors with nearly $1 trillion in assets under management, sent letters today to the heads of the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Commodity Futures Trading Commission, state insurance regulators, the Federal Insurance Office, the Federal Housing Finance Agency, and the Financial Stability Oversight Council, calling on the agencies to consider how their regulatory decisions could exacerbate the climate crisis and urging them “to implement a broader range of actions to explicitly integrate climate change across [their] mandates.”

“It is more clear than ever that the climate crisis poses a systemic threat to financial markets and the real economy, with significant disruptive consequences on asset valuations and our nation’s economic stability,” the letter reads. “You lead a critically important agency that has a mandate to protect U.S. market stability and global competitiveness. This carries with it a responsibility to act on the climate crisis right now, and to guide our transition to a net-zero future.”

Signatories include major institutional investors like CalSTRS, the New York State and New York City Comptrollers, the Maryland State Treasurer, and the Seattle City Employee Retirement System, as well as five former members of Congress from both major political parties, former U.S. financial regulators, venture capital groups, trade associations, and major philanthropic foundations. 

READ THE LETTER AND SEE THE FULL LIST OF SIGNATORIES

The signatories encourage the agencies to consider the findings and recommendations of a recently released report Addressing climate as a systemic risk: A call to action for U.S. financial regulators. The report, released by the Ceres Accelerator for Sustainable Capital Markets, highlights climate change as a threat to financial markets and outlines a series of more than 50 specific action steps for regulators to consider right now -- all of which fall within the agencies’ existing mandate.

Last week, the California Insurance Commissioner Ricardo Lara completed one of the more than 50 action steps recommended in Ceres’ report, creating the first-ever consumer-oriented database of green insurance policies.

“It has become painfully clear how vulnerable our economic system is to systemic threats. Climate risk presents significant risks to our financial system, with the potential to compound with other crises in ways that could spell catastrophe. These risks are manifesting right now, and we need regulatory action to manage them." — Maryland State Treasurer Nancy Kopp.

“The message is simple: do your job. The job of financial regulators is to protect the economy from systemic risks, and climate change is a systemic risk with the potential to wreak havoc on our economy. Our financial regulators must incorporate climate across their mandate to protect the economic security of New Yorkers and of people across this country.” — New York City Comptroller Scott Stringer

“Financial regulators at the national level have a key role to play in addressing the systemic risks that climate change poses to the long term health of our economic system. As trustee of New York state's pension fund, I have made reducing climate risks and investing in climate opportunities a priority because of the significant impact that it can have on our entire portfolio.  It is time for federal regulators to understand that they share the same responsibility to protect our nation's financial system against climate risk." — New York State Comptroller Thomas P. DiNapoli

“Climate change presents real financial risks to our economy, putting millions of lives and livelihoods at risk. This is not a political issue. It’s a scientific issue, it’s a human issue, and it’s a financial issue. Financial regulators must incorporate climate change across their mandate, and protect this country from mounting risk.” — Bob Inglis, former Republican Congressman of South Carolina and Executive Director of republicEn.org, a group of conservatives focused on climate change.

“Regulators have a unique vantage point from which to assess the implications of long-term threats to our economy, and they must find ways to provide incentives to firms and markets to build resilience against these threats. The imperative to act is crystal clear, and the action steps regulators can take have been laid out for them. They should consider them immediately.” — Brooksley Born, former Chair of the Commodity Futures Trading Commission.

“We trust our financial regulators to protect our economy from major systemic threats. It’s time they understand that climate change is one of those systemic threats, and that they do their part to incorporate climate action into their mandate. This broad-based, multi-sector group of signatories understands that reality, and they’re making sure U.S. financial regulators come to understand it, too,” said Steven Rothstein, Managing director of the Ceres Accelerator for Sustainable Capital Markets. 

The Ceres Accelerator for Sustainable Capital Markets, which coordinated the letters, is still accepting new signatories of support for this effort. Sign on here.

The Ceres Accelerator for Sustainable Capital Markets (the “Ceres Accelerator”) is transforming the practices and policies that govern capital markets in order to accelerate action to reduce the worst financial impacts of the global climate crisis and other sustainability threats. The Ceres Accelerator spurs capital market influencers to act on these systemic financial risks and drives the large-scale behavior and systems change needed to achieve a net-zero carbon economy and a just and sustainable future. It focuses on four flagship initiatives: Regulating Climate as a Systemic Risk, Achieving Paris-Aligned Portfolios, Financing a Net-Zero Carbon Economy, and Board Governance for a Sustainable Future. For more information visit: ceres.org/accelerator.