CONTACT: Barbara Hagenbaugh
(202) 457-8783
bhagenbaugh@fsforum.com
Largest banks lead the way in assessing and managing climate risk
Washington, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today in response to a report from the Sierra Club and the Center for American Progress on climate change and the financial services industry:
“The nation’s largest banks have been active and constructive participants in the effort to transition to a low-carbon economy and to align with the goals of the Paris Agreement, committing significant financing and enhancing the management of risks to their institutions. All Forum members expect to achieve carbon neutrality in their own operations by next year.
“Climate change and the transition ahead is both long-term and anticipated. The solutions are complex and require collaboration and cooperation among the public and private sectors, across a broad range of industries. It will not be solved through the blunt and poorly conceived use of capital requirements, which cushion against short-term and unanticipated severe events.
“The report makes a number of recommendations for the financial sector that would be counterproductive, ignore the current capacity of the largest banks to manage significant risks, and stymie the very institutions that are supporting their clients and customers to meet the challenges of a multi-decade transition to a low-carbon economy. While capital requirements, stress testing, and deposit insurance premiums are important components of a safe and sound financial system, there are no grounds for their use to reallocate credit as a substitute for other public policy.”
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Background
Some sources of information on climate-related financial risks and banks:
- Recent data and analysis have been informative on the nature of climate-related financial risks for large banks. While further research is certainly warranted, the data suggest that large banks are less exposed to climate-related financial risk than the banking sector as a whole, and may, in fact, perform well in response to some forms of climate risk. Learn more in Climate Risk and Large Banks: What do the Data Say?
- A focus on risk management, including scenario analysis, is important to addressing climate-related financial risk. Learn more in First Things First: Climate, Risk Management, and Capital for Large Banks.
- Learn more about what Forum members are doing to assess and manage climate risk, finance sustainable projects, and to become carbon neutral.
The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, financial inclusion, a competitive global marketplace, and a sound financial system.
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