Senate Democrats urge Treasury to assess climate change financial risk

Federal Issues U.S. Senate Climate-Related Financial Risks Department of Treasury

On August 2, Senators Elizabeth Warren (D-MA), Kirsten Gillibrand (D-NY), and Chris Van Hollen (D-MD) wrote to John Morton, Climate Counselor of the Department of Treasury’s  Climate Hub, urging the Department to address the threat to the country’s health, security, and financial system regarding the “climate crisis.” As previously covered by InfoBytes, Treasury announced a new coordinated climate policy strategy focusing on domestic and international policymaking to “leverag[e] finance and financial risk mitigation to confront the threat of climate change,” in addition to the formation of a new Climate Hub to coordinate existing climate-related efforts. The Senators’ letter seeks to gather information regarding the Climate Hub’s plan to fulfill its role, including coordinating a strategy in response to President Biden’s recent Executive Order (covered by InfoBytes here), which mandates financial regulators take steps to mitigate climate-related risk related to the financial system, including directing the Secretary of the Treasury to work with Financial Stability Oversight Council (FSOC) members to consider “assessing, in a detailed and comprehensive manner, the climate-related financial risk . . . to the financial stability of the federal government and the stability of the U.S. financial system,” and to facilitate climate-related risk information sharing between FSOC member agencies and other federal departments and agencies. The letter states that “it is imperative that you wield your leadership position in the Climate Hub to support FSOC’s efforts to align these financial regulators and implement strong guidelines to ensure that banks and financial institutions, which continue to finance risky fossil fuel investments, are adequately prepared for climate-related disruptions.”