From Ceres comes this new report detailing exactly why and how U.S. financial regulators urgently need to recognize and act on climate change as a systemic risk. It is a systemic risk because:
- Frequent extreme weather events are leading to mounting economic losses.
- The Fourth National Climate Assessment (Vol.11), based on the work of thousands of researchers, suggests that unmitigated climate change could reduce the U.S. economy by as much as 10% annually by 2100.
- Social and environmental factors are exacerbating the economic impacts.
- Migration forced by climate change has already displaced an average of 26.4 million people per year globally between 2008 and 2015. By 2050, climate change will force 50 to 700 million people to emigrate.
- The rapid loss of forests and other ecosystems is starting to impact ecosystem-dependent industries such as agriculture, tourism, drinking water and pharmaceuticals.
Climate impacts are already manifesting in the largest state economies. In just the last few years, California has experienced recording-breaking wildfires, in both number and size, that have taken hundreds of lives, bankrupted the state’s largest utility, left millions regularly without power and brought home insurability into question. Florida is facing rapidly rising sea levels and now-routine flooding that are eroding coastal property values and wiping out freshwater supplies. Texas experienced two devastating once-in-a-thousand-years flood events between 2016 and 2019, each caused by torrential rains of 40 inches or more.
The report provides more than 50 specific recommendations for key financial regulators to adopt, including the Federal Reserve Bank (the Fed), the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CTFC), state and federal insurance regulators, the Federal Housing Finance Agency (FHFA), and the Financial Stability Oversight Council (FSOC).
Read and download the Report here.