Federal financial stability watchdog stirs while some regulators snooze on climate

WASHINGTON, D.C. — Today, the Financial Stability Oversight Council (FSOC) held its first-ever public meeting focused on the implications of climate change for financial stability. The group of U.S. financial regulators, chaired by Secretary of the Treasury Janet Yellen, unanimously identified climate change risk as a major concern and reaffirmed the role financial regulators have in addressing it. But the FSOC and its member regulators failed to announce any new initiatives or commitments.

While the SEC is forging ahead with work to combat climate risk within the capital markets, others are woefully behind. The Climate Roadmap for U.S. Financial Regulation released this morning by Public Citizen and Americans for Financial Reform Education Fund offers multiple concrete steps for FSOC to take, and many of them could have been initiated today. The organizations released the following statements:

“We are glad to see the Council recognizing that climate change is a major threat to financial stability. But we are disappointed by the lack of new commitments by the FSOC and its members. Action is urgently needed; reading the climate section from a four month old Federal Reserve report does not meet the urgency of the crisis.”

“The FSOC and Treasury must pivot from this meeting and push lagging regulators to turn today’s words on climate into bold and timely action. At its next meeting, the FSOC should take the concrete steps we recommend in the Climate Roadmap. There’s still time to act, but no more time to delay.”

— Alex Martin, Senior Policy Analyst, Americans for Financial Reform Education Fund

“It’s great that Secretary Yellen is focusing attention on climate, but we need less empty talk and more action than we saw today. This meeting could have been an important step on the path to financial regulators taking on climate threats. But most FSOC members made clear they are still just waking up, repeatedly saying we’re in the ‘early days.’ It’s not early days on climate – it’s the eleventh hour.

“Financial regulators need to treat climate change as the crisis that it is. Their lack of action contradicts their rhetoric on taking the issue seriously. And it puts a fine point on the need for Secretary Yellen to name an experienced champion to lead Treasury’s climate efforts.”

— David Arkush, Managing Director, Public Citizen’s Climate Program