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Groups Call on Sec. Yellen to Retool FSOC’s Approach to Financial Risks Caused by Climate Crisis

Fifteen Years after Great Recession, Council falling short in addressing coming economic threats

WASHINGTON – The Financial Stability Oversight Council (FSOC) has failed to adequately protect the economy from climate-related impacts and risks to financial stability. As the risks grow, they could outpace FSOC’s and its members’ ability to mitigate a crisis, a coalition of consumer advocacy and environmental groups said in a letter sent today to the Council’s chairwoman, U.S. Treasury Secretary Janet Yellen.

In the letter, which comes 15 years after the events that triggered the Great Recession, Public Citizen, Americans for Financial Reform, and the Sierra Club called on FSOC to mitigate the myriad systemic risks posed by climate change. 

“FSOC has begun to build capacity and identify climate-related risks, but has taken no concrete or specific steps to mitigate them,” the groups said in the letter. “According to its recent progress report, it does not plan to do much more on the short timeline needed to get ahead of the risk.”

“FSOC’s articulated follow-up plans are merely to collect more data, better assess risks, and enhance coordination,” the groups said. “These measures are painfully inadequate in the face of how quickly the crisis is developing. None will actually mitigate climate-related risk. None will prevent a climate-related financial crisis from wrecking the financial system and broader economy while doing untold damage to U.S. families.”

The letter to Secretary Yellen comes a day before she is expected to participate in a roundtable with leaders of a range of financial institutions to discuss their climate commitments and net zero transition plans.

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