The Federal Reserve announced today that six of the nation’s largest banks will participate in a pilot climate scenario analysis exercise in 2023, designed to “enhance the ability of supervisors and firms to measure and manage climate-related financial risks.” Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo will take part in the exercise, as a result of which the Fed said there will be “no capital or supervisory implications.”
In response, Positive Money U.S.’s lead campaigner Akiksha Chatterji said:
“The new climate scenario exercise is a welcome first step and indicates that the Fed is finally beginning to take climate risks seriously, after lagging behind international counterparts.
“Climate scenario analysis is a useful exercise to assess some of the serious risks that climate change poses to financial institutions, but we need the Fed to move from exploring to acting.
“We have enough information about the dangers of climate change to justify regulatory and supervisory action now, such as penalizing banks’ excessive and reckless fossil fuel lending. To truly safeguard financial stability, the Fed must further introduce policies that reflect the high risk of fossil fuel investments.”
This news comes as the economic losses from climate-fuelled weather disasters continue to mount — hurricane Ian could cause between $30 to $60 billion in damages and economic losses, demonstrating the risk climate change already poses to our physical infrastructure and economic system. The IPPC has further warned that on a 1.5°C degree pathway, the cost of “unburned fossil fuels and stranded fossil fuel infrastructure” could amount to $4 trillion.
Notes:
- Federal Reserve Board announces that six of the nation’s largest banks will participate in a pilot climate scenario analysis exercise designed to enhance the ability of supervisors and firms to measure and manage climate-related financial risks, 29 September 2022
- For more information or to speak with a spokesperson, please contact akiksha.chatterji@positivemoney.us or Akiksha Chatterji on 510-988-3230