The U.S. Federal Reserve is taking promising – if long-delayed – steps to address the risks posed by climate change with the creation of a new supervision committee. This is the latest move demonstrating that the US central bank is finally responding to the growing crisis after years of inaction.
The Fed has established a Supervision Climate Committee (SCC), bringing together senior staff from across the Federal Reserve System to focus on the implications of climate change. It will be led by Kevin Stiroh, currently head of the New York Fed’s supervision group.
“The SCC will build on our climate change work already underway across the Federal Reserve System, and help us take a careful, thoughtful, and transparent approach to analysing these potential risks,” said Randal K Quarles, Fed Vice Chair for Supervision, in a press release announcing the new committee.
Stiroh, who is also co-chair of the Task Force on Climate-Related Financial Risks at the Basel Committee on Banking Supervision, has been vocal about climate change and the serious risks that it presents. In a speech at Harvard Business School in March 2020, he warned that climate impacts and the transition to a low-carbon economy “will be felt across business sectors and asset classes, on strategies and operations, and through the balance sheets and income statements of financial firms”.
The establishment of the SCC is a further sign that the Fed is beginning to take climate change seriously, following the inclusion of climate change for the first time in its Financial Stability Report, published in November 2020. The Fed also joined the Network for Greening the Financial System the following month, the last major central bank to do so.
Ilmi Granoff, Head of Sustainable Finance at the ClimateWorks Foundation, called the new SCC an “enormously big deal,” adding that Stiroh’s leadership could be a “step change in sophistication on climate risk supervision”.
This page was last updated April 23, 2021
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