Fed establishes Financial Stability Climate Committee

Federal Issues Federal Reserve Climate-Related Financial Risks Bank Regulatory

On March 23, Federal Reserve Governor Lael Brainard spoke at the “Transform Tomorrow Today” Ceres 2021 Conference to discuss the challenges and risks climate change poses to financial institutions. To strengthen the Fed’s capacity to identify and assess these financial risks, Brainard announced the establishment of the Financial Stability Climate Committee, which will complement the work of the Fed’s Supervision Climate Committee, and is “charged with developing and implementing a program to assess and address climate-related risks to financial stability.” The new committee will coordinate with the Financial Stability Oversight Council and its member agencies, as well as with the Fed’s community development, payments, international coordination, and economic research and data areas, in order to develop a coordinated approach. Brainard emphasized that the Fed is committed to increasing its capacity “to understand and address the risks, complexities, and challenges related to climate change within the Federal Reserve's responsibilities,” and noted that “climate change can be seen as similar to other financial stability shocks emanating from outside the financial system, such as COVID-19, which are difficult to predict with precision.”