US Treasury Secretary Janet Yellen has announced that she will lead a regulatory review to assess the risks that climate change may pose to US financial stability. More.
Since taking office as finance minister, Yellen has been one of the leading voices in the Biden administration to encourage government efforts to combat the climate crisis. “Climate change poses a new emerging risk and challenges one of the vital functions of the financial sector – to make sure the risk taken by investors and institutions is such that they can manage it,” Yellen said Sunday at the Venice International Climate Conference.
“The existing financial reporting system does not produce reliable disclosures. We also need consistency in reporting frameworks over time, as well as the ability to compare companies and jurisdictions, which provides the usage information that investors need in order to make informed decisions,” said Yellen.
Bankers are worried
“President Biden has recognized that this is a serious issue that needs to be addressed now. He recently signed a presidential decree on climate-related financial risks, and described a pan-governmental risk assessment process for the US financial system and the federal government,” she added.
Therefore, the Financial Stability Board (FSOC), chaired by the Secretary of the Treasury and made up of U.S. regulators from the Federal Reserve, the Securities and Exchange Commission (SEC) and others, will conduct a review as part of a presidential order signed by the president on climate-related financial risks.
Some are already concerned about Yellen’s statement. According to a report in the AP news agency, some senior bankers said they were concerned that the Biden administration’s efforts might encourage regulatory oversight, which would make it difficult for them to distribute loans and increase the cost of their operations.
The Biden administration has been making efforts in recent months to introduce large investments to slow global warming by spending on trillion-dollar infrastructure, which the president is urging Congress to approve these days. This effort met with opposition from Republicans and some of the administration’s climate initiatives were removed from the president’s infrastructure package to gain bipartisan support for it.
Yellen also said in Venice that the FSOC would seek to improve the disclosures that public companies make to authorities as part of the Biden administration’s initiative. “The presidential decree clarified this administration’s policy to promote climate-related financial risks, which we will also investigate through the FSOC. This will complement the work of the SEC, which is currently reviewing existing guidelines on climate-related financial disclosures,” she said.
“The landscape has changed in the US”
Yellen said she has been involved in the impact of climate change for more than 20 years when she was on President Clinton’s Council of Economic Advisers. “I remember preparing my first speech on climate change. It was in March 1998. The US Congress held hearings on the Kyoto Protocol and the Clinton administration needed someone from the White House to go. I raised my hand,” she said.
“I told Congress to think of the Kyoto Protocol as a kind of insurance policy for the planet. Would not even a significant investment in our economies abandon the use of coal be worth the effort if it saved coastal cities like Venice? If we tackled the climate crisis wisely, the benefits would be great “.
“Ultimately,” Yellen said on Sunday, “we all know what the result of that effort was. If we move forward to the present day, I’m happy to say that the human landscape has changed in the United States. “President Biden has pledged to reduce US coal emissions from levels in 2005 by at least 50% by 2030, and we also see a new consensus around a plan to achieve much of this reduction.”