Global S&T Development Trend Analysis Platform of Resources and Environment
Why the CFTC’s New Report on Climate Change and Financial Stability Matters | |
admin | |
2020-09-08 | |
发布年 | 2020 |
语种 | 英语 |
国家 | 美国 |
领域 | 气候变化 ; 资源环境 |
正文(英文) | Over the past decade, financial regulators around the world have woken up to the growing risks that climate change poses for the financial system. At first, it seemed to financial authorities that climate change was an exclusive concern of environment and foreign ministries—an issue of diplomacy and energy policy, scarcely relevant to financial markets. Even the most forward-looking could see that climate change would touch finance, but the risks appeared too far in the future, or too abstract to deal with practically. Then, countries began to adopt policies to cut emissions and price carbon. Some financial authorities began to take notice of the risk that companies and whole economic sectors — if they proved too slow to adapt to a transition to a net-zero-carbon economy — might find their assets and valuations plunging in value, disrupting financial markets. Then, as hurricanes, droughts, flooding, heat waves and wildfires destroyed livelihoods, property and supply-chains at an accelerating rate, the notion that climate change is a risk for the distant future collapsed. Financial supervisors began to consider what these extreme events could do to asset values over time and therefore to the stability of the financial system. As a result, some regulators started to act. Central banks formed a group to advance the dialogue on the issue. UK and Dutch regulators began to experiment with ways to test if banks and insurance companies were ready for climate shocks. European authorities began pushing companies to disclose more of their climate-related risks. The United States, however, has lagged in these efforts, despite being home to the world’s largest financial markets. With the publication of a major report this week by a group convened by U.S. financial regulators, it is time for that to change. Broad Coalition and Key TimingThe Commodity Futures Trading Commission (CFTC) is one of several U.S. federal agencies regulating financial markets. The CFTC focuses on the market for complex financial products known as derivatives. In the late 1990s, CFTC Chair Brooksley Born famously warned about the risk of unregulated derivatives, a warning that proved prescient when these products fueled the 2008 financial crisis. Last year, propelled by Commissioner Rostin Behnam, the CFTC convened a group of organizations to “identify and examine climate change-related financial and market risks.” While the group does not make policy, its recommendations should prove influential. Two things are worth noting about the report, produced by a group of 34 institutions, including World Resources Institute. First, it incorporates a diverse range of perspectives, bringing together the views of major banks, asset owners and managers, academics, environmental NGOs, risk management and agribusiness companies, and two major oil and gas players. Consensus among such a diverse group was bound to be difficult, but the fact that the group unanimously voted to approve the report and refer it to the relevant CFTC officials suggests the politics are ripe for taking on this challenge. Second, this report is not landing in a vacuum. It follows two major reports from legislators in the U.S. House of Representatives and the U.S. Senate calling for similar actions. It follows work from the Federal Reserve flagging risk to the financial system, as well as proposed legislation on climate-related stress testing and disclosure. And it comes at a time when the COVID-19 economic crisis is bound to weaken the financial system’s resilience to shocks, heightening the urgency of addressing the climate risk challenge. Key RecommendationsThe CFTC subcommittee’s report contains many recommendations, but a few are worth highlighting:
We hope that the CFTC group’s report will catch the attention and imagination of U.S. decision-makers, with the full understanding that the way forward will be hard. Climate risk is not one risk, but bundles of complex risks that interact with each other and with existing vulnerabilities in our financial system. Also, these risks are heading toward us at an accelerating pace. Yet, as the report concludes, U.S. regulators already have most of the authority they need under existing legislation to start addressing the challenge. What is needed now is the political will to do it. |
URL | 查看原文 |
来源平台 | World Resources Institute |
文献类型 | 新闻 |
条目标识符 | http://119.78.100.173/C666/handle/2XK7JSWQ/293757 |
专题 | 资源环境科学 气候变化 |
推荐引用方式 GB/T 7714 | admin. Why the CFTC’s New Report on Climate Change and Financial Stability Matters. 2020. |
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