Democrats have urged the Federal Reserve to address climate-related financial risk, putting the central bank under scrutiny yet again. Fed chair Jerome Powell received a letter from the Congress members saying present actions “fall short” of what is needed in the climate crisis.
The lawmakers cited how low the Fed ranks on the latest Green Central Banking scorecard which assesses G20 countries on green policies and initiatives. In order to protect financial stability, the letter says, the Fed must address climate risks as “climate-related disasters have already cost the US economy tens of billions of dollars every year”. It also points to research showing a staggering US$617bn loss to the US economy between 2018 and 2022 due to climate-related weather disasters.
According to the lawmakers, the most concerning element for financial stability is the cost of insurance as prolonged heatwaves and wildfires cause eye-watering damages, not least in terms of economic costs. “Climate-related disasters are driving up the cost of insurance and causing insurance companies to deem many parts of the country uninsurable, leaving customers with higher premiums or no coverage at all,” the letter says.
The Republican resistance to ESG principles in the US has created a deep schism among institutions regarding climate and sustainability matters, while the recent Jackson Hole summit saw a lack of climate discussion, which critics described as “shocking”. This letter represents the latest in a series of Democratic appeals for decisive action on these fronts.
The plea comes days after climate activists blockaded the Federal Reserve Bank of New York, calling for an end to funding for coal, oil and gas. An estimated 75,000 people also marched on the UN headquarters with a demand to President Biden to “end fossil fuels”.
This page was last updated September 25, 2023
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