FOR IMMEDIATE RELEASE
September 29, 2022
Media contact: Jackie Fielder, [email protected]
Fed taps six largest US banks for pilot climate scenario analysis
Today the Federal Reserve announced that Wells Fargo, Bank of America, Citigroup, Morgan Stanley, Goldman Sachs, and JP Morgan Chase will be participating in a climate scenario analysis that “will help identify potential risks and promote risk management practices,” starting in early 2023 and ending later that year. Collectively, these banks have given $1.4 trillion in financing to the fossil fuel industry in the six years after the signing of the Paris Climate Agreement.
The news comes as Hurricane Ian leaves Florida with $45 billion to $75 billion in damages and economic losses, highlighting the pressing reality of physical risks to our economic system from climate change. Climate-related weather disasters cost the US economy more than $145 billion in 2021. This year the IPCC warned investors of stranded fossil fuel assets that will amount to $4 trillion in a world where warming is limited to 2°C, and even more in a world where it is limited to 1.5°C.
Members of Stop the Money Pipeline coalition responded to the news:
“The climate crisis already affects financial institutions and the broader economy, but banks are seriously unprepared to respond and adapt. In fact, big banks still pour billions into fossil fuels, ignoring the serious risks posed by climate change and threatening the savings of everyday Americans in the process. As the country’s most powerful financial regulator, the Federal Reserve is finally sending a strong signal to banks to start taking climate risk seriously and prepare for the clean energy transition. This is a promising first step in the urgent effort to rein in Wall Street’s dangerous and reckless behavior and protect our financial system from a climate-driven economic crash,” said Adele Shraiman, Campaign Representative in the Sierra Club’s Fossil-Free Finance campaign.
“350 was excited to learn about the pilot climate scenario risk analysis exercise with the Fed and six of the US’ largest banks. While we applaud this first step, it’s not enough. Hurricane Ian is showing us that the American economy and the American people can’t wait any longer for stronger action from the Fed and the US banking system. We need the Federal Reserve to do more. Now,” said Emily Park, 350.org, Fossil Free Fed Senior Organizer.
“The new climate scenario exercise is a welcome first step and indicates that the Fed is finally beginning to take climate risks seriously, after lagging behind international counterparts. Climate scenario analysis is a useful exercise to assess some of the serious risks that climate change poses to financial institutions, but we need the Fed to move from exploring to acting. We have enough information about the dangers of climate change to justify regulatory and supervisory action now, such as penalizing banks’ excessive and reckless fossil fuel lending. To truly safeguard financial stability, the Fed must further introduce policies that reflect the high risk of fossil fuel investments,” said Akiksha Chatterji, Lead Campaigner at Positive Money US.
“The science is clear from the IPCC to the IEA: fossil fuel expansion must stop in order to halt the escalation of the climate crisis. Governments and financial institutions have been working hand-in-hand for decades to invest in and expand fossil fuel development that is harming frontline communities first and worst, and leading us toward further climate chaos. Today’s announcement is a welcome first step in holding financial culprits accountable and taking stock of the serious climate risks and impacts of their investments. However, with increasing climate-induced fires, floods, hurricanes, and droughts, business as usual must not and cannot continue— we need more robust regulatory measures to end the era of fossil fuels and transition toward a just and regenerative economy for people and planet,” said Osprey Orielle Lake, Executive Director of the Women’s Earth and Climate Action Network (WECAN)
The Stop the Money Pipeline coalition is a coalition of more than 230 organizations working to hold the financial backers of climate chaos accountable.