When you think about mitigating climate change, the first solutions that pop into your head might be solar panels, windmills, and electric transit. But climate change is such a large and interconnected problem that every sector can step up to help – and the world of finance has a tremendous impact on the climate.
If climate change goes unchecked, experts predict that damage from the crisis – including hurricane damage, real estate losses, energy costs, and water costs – will cost the U.S. nearly two trillion dollars in GDP per year. But large financial firms are operating business as usual, never even considering climate change in their plans and projections. That’s why we’re stepping in: As our climate continues to warm, Big Finance needs to embrace eco-friendly investments – and fast. Tell us what you think:
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Is it finally time for Big Finance to do its part in combating climate change?
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Germany has been faced with historic flooding. Wildfires in the Western United States caused acrid, unbreathable air for weeks. Increased temperatures are stirring up super-charged cyclones in India. The IPCC just released its annual report on the climate crisis, and the UN chief called the findings a “code red for humanity.” The fact is, the climate is changing, and the danger is too real to ignore.
In a recent episode of Pitchfork Economics, we spoke with Sarah Bloom Raskin, who is a member of the Biden administration's Regenerative Crisis Response Committee, which is working to recommend new monetary and financial regulations to help the U.S. reach carbon neutrality.
One option that the committee is considering is requiring financial firms to release an environmental impact statement to its shareholders so that investors can choose to send their money to greener operations. This isn’t too far out of reach: Publicly traded companies already have to provide hundreds of pages annually documenting potential risks that they face. A new requirement to reveal environmental risks falls well within these preexisting guidelines.
The committee is also considering establishing climate stress tests for financial institutions, which some European countries are already working on. These stress tests would answer questions like: If London suffered the extraordinary floods or long-term droughts that are plaguing other parts of the world, would their banks be able to continue to serve their clients, or would a bailout be necessary?
It’s clear that climate change is real – beyond a shadow of a doubt. Now, it’s time for Big Finance to step up to the plate and do everything they can to mitigate this crisis. We know we agree with the Biden administration’s whole-of-government approach to mitigating climate change, but we still don’t know where you stand. Tell us what you think:
Is it finally time for Big Finance to do its part in combating climate change?
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Thanks for speaking out,
Paul
Are you fired up to finally build an economy that works for all Americans? Ready to learn more from the world’s leading economic and political thinkers? Listen to the Pitchfork Economics podcast now!
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