Financial Regulators’ Climate Update Falls Short of Actions Needed to Protect Economy
WASHINGTON, D.C. – The Financial Stability Oversight Council (FSOC) today released its 2024 annual report that discusses threats to the economy and actions financial regulators have taken to address them. The report delves into the risks posed to the economy by climate change, in particular those at the intersection of physical risk, insurance, and housing markets. In response, Anne Perrault, senior climate finance policy counsel with Public Citizen, issued the following statement:
“As droughts, floods, wildfires, heat waves, and hurricanes continue to leave many communities reeling and drive an insurance protection gap, it’s not surprising that FSOC has once again identified climate-related financial risk as a key vulnerability that regulators and policymakers must assess and address. Unfortunately, FSOC remains stuck in assessment mode. The Council’s failure to recommend strong measures to address climate risks—particularly through tackling the financing and underwriting of the fossil fuel industry—is short-sighted and dangerous.
“Some FSOC regulators, such as Federal Reserve Chair Jerome Powell, believe a wait-and-see approach to addressing climate risk is appropriate because these risks are ‘long-term.’ But this perception runs into an inconvenient reality: Many impacts are already occurring, like the rapidly growing chaos in the insurance sector. And while additional significant impacts to communities, farmers, municipalities and others might not materialize until later, these impacts will be locked in now by our failure to act in the short term to meaningfully reduce emissions. As future generations suffer from climate-related financial losses, they’ll rightly wonder why regulators failed to act.”
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