ImpactAlpha, Sept. 10 – As wildfires tinged California skies an eerie orange, a key government regulator warned that climate change poses serious risks to the U.S. financial system and urged regulators to take action.
In a “first of its kind” report by a U.S. government agency – much less one in a Trump Administration – the Commodities Futures Trade Commission laid out sweeping recommendations to combat climate change. Top among them: establishing a price on carbon.
“Financial markets will only be able to channel resources efficiently to activities that reduce greenhouse gas emissions if an economy-wide price on carbon is in place at a level that reflects the true social cost of those emissions,” reads the report.
DOL disavowal
Another rule from the Department of Labor, another attack on ESG investing
A week after the U.S. Department of Labor launched another attack on environmental, social and governance, or ESG, investing, the Commission urged regulators to “confirm the appropriateness of making investment decisions using climate-related factors” in retirement funds and other fiduciary situations – without creating additional burdens. The DOL has proposed two rules that would stymie ESG investing and proxy voting in retirement funds it oversees.
New models
The CFTC recommends consolidating and expanding government efforts, including loan authorities and co-investment programs, to catalyze private sector clean energy and climate-related investment. It also suggests “climate finance labs” or regulatory sandboxes to speed innovation around climate finance and services.
“Sandboxes for nature” could speed up environmental innovation
Climate consensus
The CFTC is made up of three Republican and two Democratic commissioners. The 163-page report, Managing Climate Risk in the U.S. Financial System, was unanimously adopted by a climate risk subcommittee’s 34 members.
