Senator Warren Releases Statement on CFTC Report Concluding that "Climate Change Poses a Major Risk to the Stability of the Financial System"
Washington, DC - United States Senator Elizabeth Warren (D-Mass.), a member of the Senate Banking Committee, releases the following statement regarding a new report released by the Commodity Futures Trading Commission (CFTC), which concludes that, " U.S. financial regulators must recognize that climate change poses serious emerging risks to the U.S. financial system, and they should move urgently and decisively to measure, understand, and address these risks." The report includes recommendations pushed by Senator Warren to mitigate climate-related risks in the U.S. economy.
"Climate change is an existential crisis, and the new CFTC report confirms it's a major threat to economic stability. We need to act now to protect our communities and our economy, starting with passing my Climate Risk Disclosure Act to give the public the information they need to understand climate-related risks and ensuring that our financial system takes climate change seriously," the Senator said.
The new CFTC report includes several recommendations advocated by Senator Warren:
· Incorporating climate risks in bank stress tests
· Requiring mandatory, uniform climate risk disclosures by public companies
· Reversing the U.S. Department of Labor's proposal to limit considering environmental, social, and governance (ESG) factors in their recommendations.
Senator Warren has been a supporter of legislation and regulatory action to address the financial and economic threats posed by climate change. In May, Senator Warren submitted a comment letter urging the CFTC Climate-Related Market Risk Subcommittee to recommend strong requirements for market regulations to incorporate physical and transition risks associated with the climate crisis. The Senator urged the subcommittee to use her bill, the Climate Risk Disclosure Act, as a framework for its recommendations.
Less than one month ago Senator Warren sent a letter to the Securities and Exchange Commission (SEC) regarding recent reports of climate-related financial risks and the lack of mandatory climate disclosures. She urged the SEC to require public companies to disclose standard information about their climate-related risks, and take other actions required by her Climate Risk Disclosure Act, and asked the SEC to explain its views on how the Commission views the threat of climate change on the economy.
Last year, Senator Warren and Representative Sean Casten led their colleagues in introducing the Climate Risk Disclosure Act of 2019, which requires public companies to disclose critical information about their exposure to climate-related risks. The House bill passed the Financial Services Committee last year. The bill directs the SEC, in consultation with climate experts at other federal agencies, to issue rules within two years that require every public company to disclose:
· Its direct and indirect greenhouse gas emissions
· The total amount of fossil-fuel related assets that it owns or manages
· How its valuation would be affected if climate change continues at its current pace or if policymakers successfully restrict greenhouse gas emissions to meet the 1.5 degrees Celsius goal; and
· Its risk management strategies related to the physical risks and transition risks posed by the climate crisis.
The bill directs the SEC to tailor these disclosure requirements to different industries and to impose additional disclosure requirements on companies engaged in the commercial development of fossil fuels.
Senator Warren's Climate Risk Disclosure Act will help the market appropriately assess the risk of climate change, which will help push private actors and government actors to act more decisively to address the climate crisis. It will help promote financial stability. And it will accomplish this without expending a penny of taxpayer money.
The Senator is also an original co-sponsor of the Climate Change Financial Risk Act, which would create climate risk stress tests for the nation's largest financial institutions.
In July, Senator Warren also submitted a letter to the editor responding to an op-ed written by Labor Secretary Scalia, in which the Secretary attempted to justify the Trump administration's proposal to weaken the consideration of ESG investments. In her letter, the senator argued that climate change threatens the stability of the economy and that ESG investing protects against those risks.
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