Americans for Financial Reform and allies delivered a petition with over 60,000 signatures to the Federal Reserve Board of Governors (Fed), along with a letter signed by ten organizations. The petition and letter call on the Fed to address climate-related financial risks by issuing climate guidance to big banks.
As climate-fueled extreme weather events like Hurricane Ian become more common and as society shifts to a low-carbon economy, it’s more urgent than ever that the Fed move quickly to ensure big banks mitigate climate-related threats to our financial system and communities.
The petition and letter urge the Fed to incorporate several considerations into its climate guidance for big banks under its supervision, including:
- recognizing that banks’ continued financing of greenhouse gas emissions exacerbates climate-related financial risk by directly increasing transition risk and contributing to physical risk;
- encouraging banks to take a whole-of-business approach to mitigating climate risk and to consider appropriate time horizons for assessing and addressing climate risk;
- establishing an expectation that banks align their internal strategies with public climate commitments, both of which should be guided by science-based metrics and targets;
- embracing scenario analysis to analyze future risks;
- establishing an expectation that banks respect Indigenous rights and fund only projects and companies that uphold Free, Prior, and Informed Consent and tribal sovereignty; and
- instructing banks to mitigate adverse impacts on low-income and marginalized households and communities.