Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ The Federal report sounds alarming at climate change risks to the economy

The Federal report sounds alarming at climate change risks to the economy

The report, the first of its kind in a U.S. government entity, called on Congress to quickly impose carbon prices and urged financial regulators to “work harder and more decisively” to understand and dull the single economic damage from climate change.

“Climate change poses a significant risk to the stability of the US financial system and to the ability to sustain the American economy,” the U.S. Post Office commission commissioner wrote.

The CFTC, which controls several financial markets, is made up of three Republicans and two Democratic commissioners. The climate change advisory committee, launched by Rostin Behnam, a Democratic Commissioner, includes representatives from banks, environmental groups, investors and a major oil company. A rejection of the report emphasizes that its conclusions do not necessarily reflect the views of the CFTC or the US government.
Scientists have identified climate change as a culprit in destructive weather events across the United States, including fires, severe flooding and severe storms.
The report is noteworthy in part because it directly opposes President Donald Trump and other Republicans lowering the consequences of climate change. The President called climate change a “fraud,”
; reversing environmental regulations and even wrongly saying that wind mills could cause cancer.

Behnam, the CFTC Democratic Commissioner, hopes the industry’s widespread involvement in Wednesday’s report will change the tone from the administration.

“It is up to policy makers, elected officials and regulators to start building policies on climate stability so we do not suffer in the long run from dramatic weather events,” Behnam told CNN Business on Wednesday. . “These are the real global climate events that occur more frequently and more severely.”

Jobs, income and opportunity at stake

The report warns of the potential “financial system stress” that could hurt the economy by limiting access to credit.

“Over time, if significant action is not taken to evaluate rising average temperatures,” the report said, “the effects of climate change could harm economic productivity and weaken productivity. jobs, income, and opportunities. “

The environmental groups involved in the report emphasized the immediate need for action.

“For a group that differs politically and in the sector to issue a strong call for regulatory action is proof of how serious a systematic financial threat is changing climate in the US capital markets. , and how concerned stakeholders from across the political spectrum are about it, “Mindy Lubber, CEO of sustainable nonprofit Ceres, said in a statement.

CFTC chairman Heath Tarbert, a Republican, changed the tone of the report, emphasizing the potential disruption caused by the transfer to cleaner energy.

“The subcommittee’s report recognizes that the ‘risks of transition’ of a green economy can be as disturbing to our financial system as physical manifestations of climate change, and that rapid transitions are imminent. can be as hassle-free as doing too late, ”Tarbert said in a statement.

The climate crisis can be a financial one

The report indicates that the climate crisis could be a financial crisis.

“Climate change could pose systematic risks to the US financial system,” the report said.

That can happen through an “improper repricing of assets” with “cascading effects” on investment portfolios and balance sheets. And those effects can be reinforced by the fact that Corporate America is sitting on record record value debt, which could leave some industry vulnerable in a shock.

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Another risk is climate change causing “sub-systemic shocks,” the report said, affecting specific sectors and geographic regions.

Other reports, outside the federal government, similarly warn about the severe economic consequences of climate change.

In December, the Principles for Responsible Investment warned that climate change – and the policies designed to combat it – could remove $ 2.3 trillion from global stocks.
Last year, Stanford University researchers found that climate change is affecting poor countries and widening inequality around the world.

The CFTC climate committee has issued 53 recommendations for dealing with climate risk, including requiring companies to disclose details on greenhouse gas emissions, pilot climate stress tests, and force banks to address the financial risks of climate change.

The report also urged regulators to include climate risks in their mandates – including the Financial Stability Oversight Council, which is charged with identifying emerging threats to financial stability.

Markets are not prepared for climate risk

But the CFTC climate subcommite stressed that the “single most important step to manage climate risk” is to set the United States a “fair, whole economy and effective” carbon price. The aim is to guide capital towards clean energy and ensure that markets are pricing appropriate to the disruption caused by climate change.

Legislators and industry leaders have been debating a carbon price, like a carbon tax, for decades. Even some large fossil fuel companies like ExxonMobil (XOM) support a carbon tax in the hope of gaining clarity on the uncertain picture of control.
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“Financial markets today are not pricing climate risk. Financial markets cannot do that on their own,” Bob Litterman, chairman of the CFTC climate committee, said in the report. “Until this major flaw is fixed, capital flows in the wrong direction.”

The report called on Congress to impose a carbon price and create other appropriate incentives to combat the climate crisis.

“Only then will the appalling power of the financial system be able to address the scale of this threat,” Litterman said.

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