Disclosure Alone Will Not Save Us From Climate-Fueled Economic Crash

Upcoming FSOC report should outline steps for regulators to mitigate climate financial risk

Today, Evergreen Action Executive Director Jamal Raad released the following statement in response to U.S. Treasury Secretary Janet Yellen’s remarks on how US financial regulators will take on climate risks: 

“When it comes to ensuring the health of our financial system in the face of climate change, our financial regulators must utilize all available tools. In Venice, Secretary Yellen outlined some important actions that can rein in climate financial risk, such as mandating risk disclosure and ensuring that Multilateral Development Banks are aligning their lending with the goals of the Paris Agreement. 

"But more is needed. Here at home, disclosure is only half the battle—it will not be enough to sit back and allow Wall Street to reveal its climate contributions while simultaneously putting our communities and the whole financial system at risk with fossil fuel investments. The upcoming Financial Stability Oversight Council (FSOC) report should detail all possible actions to protect our financial system, including steps to make sure domestic banks are aligning their own actions with Paris Agreement targets. Secretary Yellen must ensure that our regulators act now, before it’s too late.” 

On May 20th, 2021, President Biden issued an Executive Order directing his administration to develop a whole of government approach to identifying and mitigating climate-related financial risk—but that work has only just begun. The President’s order called for the Financial Stability Oversight Council (FSOC) to issue a report in the coming months recommending actions to reduce risks to financial stability.