A group of investors with nearly $1 trillion in assets joined other prominent voices Tuesday in calling on U.S. regulators to consider climate change as a systemic financial risk.
A letter sent to regulators, including to the heads of the Federal Reserve and the Securities and Exchange Commission, said, "It is more clear than ever that the climate crisis poses a systemic threat to financial markets and the real economy, with significant disruptive consequences on asset valuations and our nation's economic stability."
The respective regulator's mandate to protect U.S. market stability and global competitiveness "carries with it a responsibility on the climate crisis right now and to guide our transition to a net-zero future," said the letter, which referred the regulators to more than 50 recommendations in a June report on addressing systemic risk from Ceres, the climate organization coordinating the letter.
The 72 signatories include the $246 billion California State Teachers’ Retirement System, West Sacramento; $211.2 billion New York City Retirement Systems; $210.5 billion New York State Common Retirement Fund, Albany; $56.1 billion Maryland State Retirement & Pension System, Baltimore; and the $3 billion Seattle City Employees’ Retirement System. Other signers represent companies, foundations, former regulators and members of Congress.
Along with the Federal Reserve and SEC, letter recipients include the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Commodity Futures Trading Commission, state and federal insurance regulators, Federal Housing Finance Agency and Financial Stability Oversight Council.
Maryland state Treasurer Nancy K. Kopp, who also chairs the pension system, said in a statement that regulatory action is needed to manage climate risk that has the potential to compound other crises "in ways that could spell catastrophe."
New York City Comptroller Scott M. Stringer, trustee for the city's retirement funds, put it bluntly. "The message is simple: Do your job. The job of financial regulators is to protect the economy from systemic risks, and climate change is a systemic risk with the potential to wreak havoc on our economy."