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U.S. Senate Committee on Judiciary

10/27/2021 | Press release | Distributed by Public on 10/27/2021 10:54

Feinstein: Climate Financial Risk Report Highlights Need for Greater Transparency

Washington-Senator Dianne Feinstein (D-Calif.) today released the following statement after the Treasury Department's Financial Stability Oversight Council released its climate financial risk report :

"Climate change is an existential threat to our planet and one that many don't realize also greatly endangers our financial sector. Extreme weather events - like hurricanes, wildfires or the recent storms in California - pose a serious risk to our financial system, affecting everything from commodity prices to insurance rates to home values.

"I'm glad the Biden administration agrees that we need greater transparency on the risk posed by climate change to the financial sector. This report includes many of the key proposals we called for in the Addressing Climate Financial Risk Act, including:

  • Creating an advisory committee of climate change and climate risk experts to advise the Treasury Department and federal financial regulators;
  • Ensuring that federal agencies regulating our financial system are coordinating with each other and with regulators in other countries to address the financial risks from climate change; and
  • Updating guidance for bank and credit union examiners on how to ensure the financial institutions they supervise are addressing risks associated with climate change.

"We have to address the root cause of climate change and drastically reduce our carbon emissions. California is leading the way in that effort through fuel economy and zero-emission vehicle requirements, clean electricity goals and building standards.

"However, we also have to accept the reality that climate change is happening now and look for ways to mitigate the problems it's creating, including in the financial sector."

Background:

  • Senator Feinstein is the author of the Addressing Climate Financial Risk Act, a bill to improve the ability of U.S. federal regulators to understand and mitigate risks from climate change within the financial system. In May, President Biden issued an executive order that included several provisions of the bill, including requiring a report from the Financial Stability Oversight Council on the risks climate change poses to the financial system and a review of existing financial rules and guidance to incorporate climate risk.
  • In August, Senator Feinstein sent a letter to the Securities and Exchange Commission that included comments on the agency's forthcoming rules on climate financial risk disclosures. Her letter included comments on why climate risk disclosures should be considered material information for investors, why requiring tailored disclosures is needed, ensuring that the rules are adaptable and informed by experts, and the need to coordinate the agency's efforts with other U.S. and international regulators.
  • In January, Senator Feinstein called on Treasury Secretary Janet Yellen to implement key provisions of the Addressing Climate Financial Risk Act,including creating a permanent group of experts on climate financial risk, climate economics and climate change. Secretary Yellen subsequently created a "Treasury Climate Hub" to coordinate climate policy strategy, including with the Financial Stability Oversight Council.
  • In September 2020, Senator Feinstein called on the Treasury Department's Federal Insurance Office to issue a report on the impact of increased wildfire risk due to climate change on private insurance markets. President Biden's May 2021 executive order included requiring a report on the risks that climate change poses to insurance markets. The Federal Insurance Office solicited public comments for such a report in August.
  • In June 2020, Senators Feinstein and Marco Rubio (R-Fla.) called on the Commodity Futures Trading Commission to include specific recommendations for addressing the financial risk of climate change in the report by its Climate-Related Market Risk Subcommittee that was subsequently released in September 2020.

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