Economy Fed says climate change poses financial risk

Fed says climate change poses financial risk

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648x415 manifestation italie turin demander mesures contre changement climatique 9 octobre 2020

A demonstration in Italy in Turin to demand action against climate change, October 9, 2020. – Alberto Gandolfo

Will the fear of losing money indirectly have positive consequences in the fight against global warming? The only certainty is that the US Federal Reserve (Fed) is in turn sounding the alarm. “Climate change poses significant risks for financial stability”, warned Monday Lael Brainard, one of the officials of the Central Bank. She therefore called for them to be evaluated and answered.

“It is vital to move from recognizing the significant risks posed by climate change to financial stability, to the stage where the quantitative consequences of these risks are properly assessed and addressed,” said the official, whose name is often mentioned, in the American press, for the post of Minister of Finance (Treasury secretary) of President-elect Joe Biden. These comments were published on the occasion of the release of the Fed’s semi-annual financial stability report. This takes into account for the first time the impact of global warming on the economy.

Better assess the risks

Lael Brainard especially deplores the lack of clarity on the part of companies on the financial costs of their real exposure to the risks associated with global warming. Hurricanes, storms, floods, forest fires, “can lead investors to suddenly review their perception of the value of their property or financial assets,” she warned.

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