Trading Commission Report Sends Clear Signal of Climate Change Risks to US Economy

Statement by Rachel Cleetus, Union of Concerned Scientists

Published Sep 9, 2020

WASHINGTON—The Commodity Futures Trading Commission (CFTC), headed by Trump administration appointee Commissioner Rostin Behnam, released a new report today titled “Managing Climate Risk in the Financial System.” The findings from the first-of-its-kind CFTC report offers a consensus view of the 34-member Climate-Related Market Risk Subcommittee, which has representation from financial firms, NGOs, academia and industry.

Below is a statement by Rachel Cleetus, lead economist and policy director for the Climate and Energy Program at the Union of Concerned Scientists (UCS).

“This report sends another clear signal that climate change poses a significant risk to our economy and financial system. If left unaddressed, these risks—which include flooding exacerbated by sea level rise and heavy rainfall, extreme heat, and worsening wildfires—will escalate untenably and harm our prosperity and well-being today and into the future.

“Markets for agricultural commodities, real estate, insurance and mortgages are among those highly exposed to these risks, as are the supply chains of many companies. Liability risks for fossil fuel companies, whose products are the main drivers of climate change, are mounting as cities, counties and states file lawsuits against these companies, including ExxonMobil and Chevron, to recover the costs of climate damages and fraud.

“We only need to look around the nation today to see that devastating and costly climate change impacts are already here and now, as evidenced by horrific wildfires in California, Oregon and Washington, as well as the super-charged 2020 hurricane season that just won’t let up.

“The science is clear: we can and must limit these risks by sharply cutting global heat-trapping emissions and transitioning to a net-zero economy no later than 2050. The report also makes a series of policy recommendations, including strengthening the Securities and Exchange Commission’s requirements for disclosure of climate risks by publicly traded companies, calling on regulators to review the administration’s attempt to forbid retirement managers from considering climate change and other environmental concerns in investment decisions, improving financial regulation and oversight of climate risks by federal and state authorities, and putting a price on carbon. Better data and tools for assessing and managing climate risks are also needed.

“Financial regulators and the private sector must live up to their responsibilities to help protect our nation and prepare for climate change. However, market-based policies will not be sufficient on their own, especially in addressing long standing racial and socioeconomic inequities caused by climate change. Comprehensive, equitable and just climate policies are vital.”

For more information, click here to see comments submitted by UCS to the CFTC in June 2020 as input to the report.