January 22, 2020

Warren Questions "Too Big to Fail" Banks on Plans to Address Climate Change Risks Faced by Financial Industry

Groundbreaking Research by San Francisco Fed Highlights Potential Risks to Businesses, Communities, and the Financial System

Text of Letters (PDF)

Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.) wrote to the eight global systemically important banks (G-SIBs) under U.S. jurisdiction -- JPMorgan Chase, Citigroup, Bank of America, Goldman Sachs, Wells Fargo, Bank of New York Mellon, Morgan Stanley and State Street -- inquiring about the banks' plans to mitigate the climate change risks to the financial industry.

Late last year, the Federal Reserve Bank of San Francisco published a series of research papers and held the system's first-ever climate research conference, both of which highlighted the climate-related dangers businesses, communities, and the financial system face-including the possibility of a significant decrease in home values, the end of lending by financial institutions to communities susceptible to flooding, and a loss of tax revenue for towns coming just as they need these funds to build sea walls and make other investments in resilient infrastructure.

"As climate change continues to affect our economy, it is critical to understand your bank's adaptation and mitigation strategies," the senator wrote in her letter.

Citing the San Francisco Fed's research -- as well as recent statements from Federal Reserve Board Governor Lael Brainard regarding the severity of climate risks to the U.S. economy and financial system -- Senator Warren expressed concern that Federal regulators are ignoring these risks and urged the banks to move swiftly to address them.

While some central banks around the world are taking action to confront climate-related risks to the global financial system, U.S. regulators continue to ignore the risks, despite the San Francisco Fed's groundbreaking work," the senator continued. "To protect themselves and the economy from climate-driven catastrophes, large financial institutions must act quickly to address risks."

To address her concerns, Senator Warren asked the banks to answer a series of questions about the steps each institution is taking to understand, adapt to, and mitigate the financial risks posed by the climate crisis. She requested a response to her letter by February 7, 2020.

In July 2019, Senator Warren reintroduced the Climate Risk Disclosure Act of 2019, a bill to require public companies to disclose critical information about their exposure to climate-related risks. In November 2019, she co-sponsored the Climate Change Financial Risk Act of 2019, which would require the Federal Reserve to conduct stress tests on large financial institutions to measure their resilience to climate-related financial risks.