January 31, 2021 - Washington—Senator Dianne Feinstein (D-Calif.) has called on Treasury Secretary Janet Yellen to implement key provisions of the Addressing Climate Financial Risk Act, the senator’s bill that would improve the ability of federal regulators to understand and mitigate risks from climate change within the financial system.

More information on the Addressing Climate Financial Risk Act is available here.

These provisions include directing the Federal Insurance Office to issue a report on ways to keep insurance affordable and available in California despite the increasing risk of wildfires and other climate-related natural disasters.

“As chair of the Financial Stability Oversight Council, you are in a position to implement some of its provisions, including creating an advisory committee of climate risk experts, directing the council to produce a report on the risks that climate change poses to the U.S. financial system, and asking council members to coordinate their efforts on climate financial risk and to update their supervisory guidance to reflect climate financial risk,” Senator Feinstein wrote. “I encourage you to move forward with these actions, and also to direct the Federal Insurance Office to develop its own report on addressing climate financial risk in the U.S. insurance regulatory system.”

Full text of the letter follows:

January 28, 2020

The Honorable Janet Yellen, Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Dear Secretary Yellen,

First, allow me to congratulate you on your confirmation as Treasury Secretary, and thank you for giving me the honor of introducing you at your confirmation hearing. I can think of no one better to lead the Treasury Department at this pivotal time.

Watching your January 19 confirmation hearing, I was pleased to hear that you plan to emphasize addressing climate change in your new position. As I mentioned on our December 9 phone call, I introduced legislation—the “Addressing Climate Financial Risk Act”—in the 116th Congress. I intend to reintroduce this legislation soon and hope that you will support it and, where possible, that you will implement its provisions on your own.

The “Addressing Climate Financial Risk Act” includes common-sense provisions (a list is attached) that would help the Treasury Department and federal financial regulatory agencies identify and mitigate climate financial risk. As chair of the Financial Stability Oversight Council, you are in a position to implement some of its provisions, including creating an advisory committee of climate risk experts, directing the Council to produce a report on the risks that climate change poses to the U.S. financial system, and asking Council members to coordinate their efforts on climate financial risk and to update their supervisory guidance to reflect climate financial risk. I encourage you to move forward with these actions, and also to direct the Federal Insurance Office to develop its own report on addressing climate financial risk in the U.S. insurance regulatory system.

I look forward to working with you on this and other issues, and ask that you feel free to call on me at any time if I can be helpful.

Sincerely,

Dianne Feinstein
United States Senator 

Attachment: Provisions of the “Addressing Climate Financial Risk Act”

• Create a permanent Advisory Committee on Climate Financial Risk made up of experts on climate financial risk, climate economics, and climate change on the Financial Stability Oversight Council (FSOC).
  
  
• Working with this committee, produce an FSOC report that assesses, and makes recommendations to improve, the ability of the U.S. financial regulatory system to identify and mitigate climate financial risk.
  
  
• Update FSOC’s guidance for designating nonbank financial institutions for additional supervision by the Federal Reserve Board to specify how climate financial risk will be taken into account in designation decisions.
  
  
• Direct the Federal Insurance Office to assess the potential impact of climate financial risk on the U.S. insurance sector and recommend ways to modernize the U.S. system of climate financial risk regulation in insurance.
  
  
• Encourage FSOC member agencies to develop written strategies to identify and mitigate climate financial risk, and to update their supervisory guidance to reflect those strategies.
  
  
• Encourage FSOC member agencies to share best practices and coordinate with each other in addressing climate financial risk.
  
  
• Encourage FSOC member agencies to work with and coordinate their efforts on climate financial risk with other countries to the extent feasible.
  Source: Senator Dianne Feinstein