The White House has issued a 40-page report that lays out the current administration’s view that the economy is intrinsically linked to climate change and that it poses systemic risks to the US financial system.
Among other things, the report, titled ‘A roadmap to Build a Climate-Resilient Economy,’ argued that the government has a vital role to play in safeguarding the financial system and mustering public and private financing for decarbonization.
According to the report, the government will act urgently to this effect, as it said the most effective risk strategy is investing in decarbonization.
It also stated that climate change is already having an effect on the economy and poses various risks to the financial system in the immediate term.
According to the report: “Climate-related risks to the financial system must be taken seriously because they present a uniquely complex set of risk management challenges. Climate change is affecting a wide range of sectors, geographies, and assets across the United States. These impacts threaten homes, businesses, infrastructure, supply chains, food supply, and human health and safety—all of them urgently challenged by a climate that is changing rapidly.”
An upcoming report from the Financial Stability Oversight Council, focused more directly on regulatory actions impacting the banking and financial sectors, is expected this week.
According to the roadmap just published, this next report will kick off the first step in a process whereby US financial regulators will develop capacity to mitigate climate-related financial risks.
Other measures to protect the resilience of the financial system, according to the report, include the launch of the federal insurance office’s process to address climate risks in the insurance sector.
Meanwhile the securities and exchange commission (SEC) is developing recommendations for a mandatory disclosure rule for public issuers.
The rule is intended to bring greater clarity to investors about the material risks and opportunities climate change poses to investments.
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