As noted in an earlier post, part of the US regulatory structure is busy looking at rules to prevent pension funds from looking at ESG factors in making investment decision. Interestingly a subcommittee of the Commodity Futures Trading Commission (another US regulatory body) is clearly warning of the risks of climate change for the financial system. This report was reported by the Financial Times in an article that notes this seeming discrepancy between two regulatory agencies. It does raise the question if the right hand knows what the left hand is doing.
At the same time it is heartening to see that even US regulators are beginning to sound the alarm on risks from climate change. The full report of the sub-committee is available for all to read. It correctly notes in its summary that “(c)limate change poses a major risk to the stability of the U.S. financial system and to its ability to sustain the American economy. This reality poses complex risks for the U.S. financial system.” I encourage all bankers to read this report and consider actions they should be taking to mitigate the identified risks.
