To Be Confirmed For A Second Term, Powell Must Be Prepared To Rein In Climate Risk

Evergreen Action Has Released 5 Concrete Action Steps For The Fed To Take On Climate Change And Protect Financial Stability 

Following the announcement that President Biden has selected Jerome Powell to serve as the next Chair of the U.S. Federal Reserve, Evergreen Action Executive Director Jamal Raad issued the following statement:

“After a full term as Chair of the Federal Reserve, Jerome Powell still has a long way to go when it comes to tackling the systemic threat climate change poses to our entire financial system. Under Powell’s leadership, the Fed has made some important early steps towards incorporating climate into routine stress testing scenarios, but they are far from sufficient to mitigate the risk of a climate-fueled economic crash.

“In the upcoming confirmation hearings, senators should press Mr. Powell on how he plans to use every tool at his disposal to fulfill the Fed’s mandate to promote stability and mitigate the systemic risk posed by the climate crisis. If he can’t answer those questions, he’s not qualified to serve a second term as chair.

“In addition to today’s key nominations, and following the recent resignation of Vice Chair for Supervision Randal Quarles, President Biden must ensure there is a majority on the Board of Governors that understands the scope of climate-related financial risk and is willing to take proactive steps to address it. We saw in 2008 what happens when regulators take a ‘wait and see’ approach to a rising tide of systemic financial risk and we can’t afford another Great Recession. The Fed has a mandate, and the existing authority to protect our economy from climate-related financial risk, and Powell doesn’t have a moment to waste.”

As part of it’s 5 to Mobilize series, Evergreen has released five concrete action steps for the next Fed Chair to use every tool at their disposal to address climate-related financial risk and protect financial stability. You can read the full set of recommendations here, and see an overview of the recommendations below: 

1. Creating Mandatory Climate-Risk Disclosure Rules

2. Conducting Regular Climate Stress Tests

3. Setting Higher “Capital Requirements” For Climate-Risky Assets

4. Limiting Investments That Are Not In Line With the Paris Agreement

5. Updating the Community Reinvestment Act Regulations To Drive Equitable Green Finance