Climate change may wreck economy unless we act soon, federal report warns

Enlarge / A boat motors by as the Bidwell Bar Bridge is surrounded by fire in Lake Oroville during the Bear fire in Oroville, California, on September 9, 2020. (credit: Josh Edelson | AFP | Getty Images)

The ever-worsening climate crisis is already causing waves of human suffering-both internationally and here in the United States. And now, a new report from a US financial regulator finds that climate change is also poised to do major damage to some of the institutions with the most power to help mitigate it: Wall Street banks and investors.

Climate change "poses a major risk to the stability of the US financial system and to its ability to sustain the American economy," the report (196-page PDF) from the US Commodity Futures Trading Commission (CFTC) begins. Regulators "must recognize that climate change poses serious emerging risks to the US financial system, and they should move urgently and decisively to measure, understand, and address these risks."

The report, called "Managing Climate Risk in the US Financial System," was written by a group of 35 advisors from major banks such as Morgan Stanley and JPMorgan Chase, environmental groups such as The Nature Conservancy and Ceres, energy firms such as BP and ConocoPhillips, several investment firms, and experts from several universities. It is the first analysis of climate change to come from a US financial regulator looking specifically at how change, already underway, will affect trading of agricultural commodities and futures, the real estate and insurance markets, and all the complex financial instruments that are built on multiple industries taken together.

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