The Federal Reserve is launching a committee to identify, assess and address climate-related financial stability risks, Fed Governor Lael Brainard said Tuesday.
The Financial Stability Climate Committee will consider the potential for complex interactions across the financial system at a "macroprudential" level. It will complement the work of the Fed's Supervision Climate Committee, which was announced in January and has similar goals on a "microprudential" level to ensure the resilience of the Fed's supervised firms to climate risks, Ms. Brainard said during a speech at a Ceres conference, according to a transcript posted on the Fed's website.
"It is increasingly clear that climate change could have important implications for the Federal Reserve in carrying out its responsibilities assigned by the Congress," Ms. Brainard said. "Given the implications of climate change for both individual financial institutions and the financial sector as a whole, we need a framework that incorporates both microprudential and macroprudential considerations."
The announcement Tuesday continues the Fed's recent efforts to address climate risks to the financial system. In its semiannual Financial Stability Report released in November, the Fed recognized climate change as a key risk to U.S. financial stability.
And in December, the Fed announced it had joined the Network of Central Banks and Supervisors for Greening the Financial System, which brings central banks and supervisory authorities from around the world together to support the exchange of ideas, research and best practices on the development of environmental and climate risk management for the financial sector.
"These are not easy problems, and they will not have easy solutions," Ms. Brainard said Tuesday. "Despite the challenges, it will be critical to make progress, even if initially imperfect, in order to ensure that the financial system is resilient to climate-related risks and well positioned for the transition to a sustainable economy."