FOR IMMEDIATE RELEASE
October 21, 2021
Contact: Jackie Fielder, [email protected]
Stop the Money Pipeline coalition members respond to FSOC report on Climate-Related Financial Risk
WASHINGTON, D.C. — On Thursday, the Financial Stability Oversight Council (FSOC), chaired by Treasury Secretary Janet Yellen, issued an unprecedented report on climate-related financial risk. The report is the result of President Biden’s Executive Order on Climate Related Financial Risk issued in May. Among other things, the report was to provide recommendations on how to mitigate climate-related financial risk, including through “new or revised regulatory standards.”
In May, Stop the Money Pipeline coalition members called for the report to be released ahead of the COP26 climate talks in Glasgow beginning October 31. Notably, the FSOC report is being issued weeks ahead of schedule to meet that deadline. The Stop the Money Pipeline coalition has maintained during its Deadline Glasgow: Defund Climate Chaos campaign that President Biden must ensure all U.S. financial institutions are firmly on a path to real zero greenhouse gas emissions before COP26. Earlier this year, the International Energy Association affirmed that in order to achieve net zero emissions by 2050 and keep global temperature rise below 1.5ºC, “there is no need for investment in new fossil fuel supply in our net zero pathway.”
Member organizations of the Stop the Money Pipeline coalition released the following statements in reaction to the FSOC report’s publication:
“President Biden’s May Executive Order was supposed to result in a first step towards eliminating Wall Street’s financing of the drivers of the climate crisis and preventing another bank-led financial crisis, but this report falls pitifully short of the mandate presented by the May Executive Order. It leaves Biden with very little to show going into international climate negotiations in Glasgow, as it barely includes any new contributions from the U.S. government. Even worse, this report is a slap in the face to Black, Brown, and Indigenous frontline communities that have been targeted by the fossil fuel industry and demanding that Wall Street stop funding projects like the Line 3 pipeline and Formosa Plastics,” said Erika Thi Patterson, Campaign Director for Climate and Environmental Justice at the Action Center on Race and the Economy.
“This report makes it clear that financial regulators understand the need for action to ensure that the climate crisis doesn’t cause the next financial crisis. However, by leaving out key risk-reduction tools, it is not treating the problem with the urgency it deserves. Secretary Yellen’s report lays out preliminary steps to make the financial industry more transparent and accountable for their growing climate risks, but it’s also a missed opportunity to recommend actions that actually reduce climate risk and limit Wall Street’s toxic investments in the fossil fuels that are driving the crisis. Financial regulators can and must act to rein in Wall Street’s contributions to the climate crisis, which threaten our financial system and the small businesses, pensions, communities and families that depend on it. This report is a step in the right direction, but bolder action from regulators is necessary in order to protect our economy from the climate crisis,” said Ben Cushing, Fossil-Free Finance Campaign Manager at the Sierra Club.
“This report might have been welcomed if it had been included as a memo five months ago accompanying President Biden’s executive order — but as the result of several months’ work, it is deeply disappointing. FSOC’s inability to move beyond basic recognition of climate-related financial risk and refusal to recommend tangible actions to effectively mitigate that risk is woefully insufficient to meet the moment. Fossil fuels are the primary driver of climate change, and financial institutions are funding trillions in fossil fuel projects each year. Arriving at COP26 with a climate risk plan that doesn’t adequately address this reality means the Biden Administration risks forfeiting its chance at climate leadership,” said Collin Rees, U.S. Campaigns Manager at Oil Change International.
“This report affirms recognition of the dangers of the fossil-fueled climate crisis on our communities, financial system, and economy. But because of Federal Reserve Chair Jerome Powell’s historic foot-dragging, the US Treasury failed to live up to the bar of action. If the US actually wants to lead on climate, President Biden must replace Powell with a Fed Chair who will take climate risk seriously. Ahead of COP26, it’s time for swift and responsible transformation that steers our economy off fossil fuels, and stops the risky practices of climate destroyers on Wall Street. That’s why we’re making the Peoples’ voices heard, and rising for a Fossil Free Future on October 29,” said Brett Fleishman, Head of Finance Campaigns with 350.org.
“This report is an important, unprecedented step, and it sends a strong signal to Wall Street that U.S. financial regulators are getting serious about climate risk. At the same time, it includes only the bare-minimum first steps—ones that should have been taken long ago. One of the report’s final recommendations [number 4.7] is that regulators should review existing rules and guidance to consider whether they need to do more. That’s what this report should have done. We need much stronger leadership from the White House and Treasury if we’re going to avoid a climate-based financial crisis,” said David Arkush, director of Public Citizen’s climate program.
“Nine months into Biden’s presidency and 98 months until the crucial 2030 emissions reduction deadline, a report that mostly consists of recommending more research is completely inadequate. The clock is ticking and FSOC is utterly failing to meet the moment. We need to see regulators move more quickly and work above and beyond the recommendations of this report,” said Jeff Hauser, Executive Director of the Revolving Door Project.