September 25, 2023

Warren, Senators Urge Treasury Department to Address Climate-Related Financial Risks

Senators Outline Key Actions Treasury Should Take on Economic and Environmental Crises Caused by Climate Change

Text of Letter (PDF)

Washington, D.C. – United States Senators Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Martin Heinrich (D-N.M.), Ed Markey (D-Mass.), Sheldon Whitehouse (D-R.I.), and Jeff Merkley (D-Ore.) sent a letter to Secretary of the Treasury Janet Yellen and newly-appointed Treasury Climate Counselor Ethan Zindler, urging the Treasury Department (Treasury) to take key actions pertaining to climate and climate-related financial risk to avert the impending environmental and economic crises..

“Since the Biden Administration issued its Executive Order on climate-related financial risk in May 2021, Treasury and financial regulators have initiated important efforts to better understand the serious threat climate change poses to the financial system. While Treasury and U.S. regulators have made some progress, they still lag behind the progress in other countries. And unfortunately, recent climate disasters and financial disruptions reveal that climate change is outpacing efforts to get ahead of the risk… Treasury must quicken its pace and begin using all of the tools at its disposal, including its leadership of the Financial Stability Oversight Council (FSOC), to address the rising challenges, and align the financial system with a net-zero emissions future,” wrote the senators. 

“As climate financial impacts grow, the Climate Hub and Treasury must pursue with added urgency all available measures to address the climate crisis and its threat to the stability of our financial system…Particularly with its responsibilities for financial oversight and implementation of the IRA, Treasury is uniquely positioned to tackle challenges faced while promoting the opportunities of a clean energy economy,” they noted.

This letter follows Climate Counselor Zindler’s appointment to the role this summer, and comes on the heels of Secretary Yellen’s announcement at Climate Week in New York regarding Treasury’s new net-zero transition guidance for financial institutions.

In the letter, the senators outline critical actions Treasury should take, including: 

  • Working with the White House, the Environmental Protection Agency, and the financial regulators to help coordinate and disseminate broadly information about IRA opportunities, while addressing environmental justice, consumer protections, labor and equitable workforce development, and community engagement, accountability, and benefits.
  • Leading FSOC in finalizing and immediately beginning to use its recently proposed analytic risk framework and designation guidance for nonbank systemically important financial institutions, to allow for adequate federal supervision of nonbanks that are driving the unchecked growth of climate-related financial risk.
  • Playing a role in developing and encouraging the uptake of higher quality climate scenario analysis exercises for banks, grounded in climate science.
  • Office of Financial Research (OFR) expanding access to the Climate Data and Analytics Hub beyond staff of the OFR, the Federal Reserve, and the Federal Reserve Bank of New York to which the pilot is currently limited, in order to give access to all FSOC member agencies to public climate and financial data, high-performance computing tools, and analytical and visualization software.
  • Aligning financial institutions with the net zero transition and working to close gaps in its recently-published net zero transition guidance.
  • Investigating the extent to which abuse of 501(c)(3) and 501(c)(4) authorities is used to anonymize fossil fuel political obstruction of measures that could open a pathway to climate safety.

The senators are asking Treasury to answer a set of questions about its plans to fulfill these goals by October 12, 2023. 

Senator Warren has long fought to push financial regulators to act on climate and climate financial risk:

  • In September 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, U.S. Senator Warren highlighted the recent withdrawals of major insurance companies from states that have a high and growing  risk of climate disasters, the impact of this insurance crisis on homeowners, and the need for increased transparency from insurance companies.
  • In September 2023, Senators Warren, Chris Van Hollen (D-Md.), and Whitehouse sent a letter to Secretary Yellen and Federal Insurance Office (FIO) Director Steven Seitz calling on the FIO to finalize its proposal to collect data from major insurers to better assess the impact of climate change on insurance availability and affordability, including in communities that are most vulnerable to the effects of climate change.
  • In March 2023, Senators Warren, Whitehouse, and Markey sent a letter to Secretary Yellen following Climate Counselor John Morton’s departure and urging Treasury to take swift and aggressive action to tackle the climate crisis, which threatens our health, security, and financial system. 
  • In March 2023, Senators Elizabeth Warren, Sheldon Whitehouse (D-R.I.), and Representatives Dan Goldman (D-N.Y.) and Jamie Raskin (D-Md.) and 47 of their colleagues sent a letter to Securities and Exchange Commission (SEC) Chairman Gary Gensler, urging him to protect investors and finalize a strong climate disclosure rule without further delay.
  • In September 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on SEC Chair Gary Gensler to protect investors and stand up to fossil fuel lobbying by issuing a strong climate risk disclosure rule quickly.
  • In June 2022, Senator Warren led a comment letter with Senators Whitehouse and Schatz on the SEC’s mandatory climate disclosure rule, highlighting several areas for improvement and key elements that the SEC should preserve in its final rule, including strong Scope 3 emissions disclosure requirements.
  • In March 2022, Senator Warren led a letter with Senators Sheldon Whitehouse (D-R.I.) and Brian Schatz (D-Hawaii) urging the SEC to require disclosure of anti-climate lobbying activities in the Commission’s rule.
  • In February 2022, Senator Warren led a letter to the SEC about the delayed release of the SEC’s proposed climate change disclosure rule, urging them to act quickly to get a rule out.
  • In August 2021, Senators Warren, Kirsten Gillibrand (D-N.Y.), and Chris Van Hollen (D-Md.) sent a letter to John Morton – the first Climate Counselor at the new Climate Hub at the U.S. Department of the Treasury – urging swift and aggressive action to tackle the climate crisis, a major threat to the country’s health, security, and financial system.
  • In May 2021, Senator Warren and Congressman Andy Levin (D-Mich.) introduced the Buy Green Act to use the enormous breadth of U.S. federal procurement to help fight the climate crisis, spur innovation, and boost demand for American-made clean energy products at home and in the rapidly-growing markets for green products abroad.
  • In May 2021, Senator Warren and Congressman Andy Levin (D-Mich.) introduced the National Institutes of Clean Energy Act of 2021, legislation that would invest $400 billion over the next ten years to establish and operate a new system of institutes at the Department of Energy dedicated to research and development (R&D) of advanced clean energy technologies.
  • In April 2021, she and Representative Sean Casten (D-Ill.) reintroduced the Climate Risk Disclosure Act of 2021 which would reduce the chances of environmental and financial catastrophe by requiring public companies to disclose more information about their exposure to climate-related risks.
  • In March 2021, Senator Warren unveiled the BUILD GREEN Infrastructure and Jobs Act which would invest $500 billion over ten years in state, local, and tribal projects to jumpstart the transition to all electric public vehicles and rail and help modernize the nation's crumbling infrastructure.