U.S. regulators welcome efforts to address climate risks

WASHINGTON (AP) – U.S. financial regulators on Thursday approved a series of measures toward addressing the risks posed by climate change to the nation’s financial system.

The Financial Stability Oversight Council, headed by Treasury Secretary Janet Yellen and with Federal Reserve Chairman Jerome Powell, has identified in a report that climate change is a serious threat to the economy.

“Climate-related effects in the form of warming temperatures rising sea levels, thirst, fires, intensifying storms and other climate-related events impose huge costs on the public and the economy, ”the council’s 133-page report said. “It is the responsibility of the council and its members to ensure the stability of the financial system against climate -related risks.”

The report includes more than 30 proposals aimed at improving efforts to assess risks. It has issued recommendations to upgrade risk data collection and also ways to ensure the public has access to the data.

The report was released 10 days before a United Nations conference on climate change in Glasgow, Scotland. It signals the Biden administration’s desire to tell the wider international community that it is integrating policy architecture to address climate change and improve the sustainability of financial markets.

With the United States lagging behind the European Union and the United Kingdom in responding to the economic threats of climate change, the administration expects to use the report to assert more leadership on the issue.

As the report recommends, a special advisory committee will be established by scientists, Wall Street executives, business and labor leaders, environmentists and others to help develop standards for monitoring the economic impact of climate change.

The report also advised identifying and filling in data gaps for assessing how climate change could threaten the economy, including sharing data across the federal government and with international counterparts.

The council approved the creation of two climate advisory panels that will report to the team on a regular basis to keep officials informed of progress that has been made.

Companies and government agencies will also have new standards for public disclosure about climate, a measure designed to make it easier for markets to properly weigh the effects of climate change and the potential savings from reducing impacts through measures such as the use of renewable energy. .

Yellen called the changes approved by the FSOC as an “important first step” but said they do not end the group’s effort to better incorporate climate threat assessment into the regulatory process.

He said intense events during this summer from wildfires in the West to Hurricane Ida along the Gulf Coast showed a need for action.

Powell, who called climate change a “significant challenge for the global economy and financial system,” said the Fed is focused on doing its part in such areas as using more sophisticated analyzes to better assess climate risks.

Yellen has made addressing climate change a top priority since joining the Biden administration.

However, environmental groups said they regret that the FSOC did not make more ambitious recommendations.

“Financial regulators can and should act to strengthen Wall Street’s contributions to the climate crisis,” said Ben Cushing, the Sierra Club’s fossil -free finance campaign manager. “This report is a step in the right direction, but it takes more courageous action from managers to protect our economy from the climate crisis.”

The FSOC is an advisory panel comprised of heads of leading government financial control agencies. It was created by Congress in 2010 to address serious coordination problems between agencies announced by the 2008 financial crisis.

The report and these recommendations were approved by all panel members except Jelena McWilliams, the head of Federal Deposit Insurance Corp., who avoided the fact that she thinks more information is needed before a conclusion can be reached. McWilliams was appointed to the FDIC by former President Donald Trump.

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