Requires FSOC to analyze climate financial risk, issue report, mirroring key provisions of Feinstein bill

May 23, 2021 - Washington - Senator Dianne Feinstein (D-Calif.) last week released the following statement after President Biden signed an executive order directing Treasury Secretary Janet Yellen and the Financial Stability Oversight Council to issue a report on climate-related financial risk:

“I support President Biden’s executive order directing his administration to study the financial risks of climate change. Californians, who are experiencing more frequent and severe wildfires and droughts, already know we can’t continue to ignore the problem – the cost of inaction is too high.

“Reducing our carbon emissions is the best tool to fight climate change. But climate change is already creating a strain on our financial system. For instance, wildfires are driving up property insurance cost, making it less available. Farmers are being forced to contend with more severe droughts. And sea-level rise is undermining homes and critical infrastructure.

“This executive order is a helpful step and includes several provisions in the Addressing Climate Financial Risk Act that I introduced with Representative Sean Casten in March. Those include a comprehensive assessment by financial regulators of climate financial risk, direction to the Federal Insurance Office to assess the potential for major disruptions of private insurance coverage and a review to ensure existing rules and standards help mitigate climate risk. The president also called for improved information sharing among federal financial regulators on this topic.

“Climate change is real and happening now, so we can’t afford to waste any more time. Understanding the risks climate change poses will help us better understand and confront the problem.”

Background:

• Senator Feinstein is author of the Addressing Climate Financial Risk Act, a bill to improve the ability of federal regulators to understand and mitigate risks from climate change within the financial system.
  
  
• In January, Senator Feinstein called on Treasury Secretary Janet Yellen to implement key provisions of the Addressing Climate Financial Risk Act including creating a permanent Advisory Committee on Climate Financial Risk made up of experts on climate financial risk, climate economics and climate change.
  
  
• Last September, Senator Feinstein called on the Treasury Department’s Federal Insurance Office to issue a report on the impact of increased wildfire risk due to climate change on private insurance markets. 

• Last June, Senators Feinstein and Marco Rubio (R-Fla.) called on the Commodity Futures Trading Commission to include specific recommendations for addressing the financial risk of climate change in the upcoming report by its Climate-Related Market Risk Subcommittee, the first federal financial regulator advisory committee focused on the risk climate change poses to the financial system.
  Source: Senator Dianne Feinstein