The Federal Reserve yesterday announced a Financial Stability Climate Committee (FSCC) in the latest sign that the US central bank is moving fast to establish a framework to address climate change risk holistically across its operations.
It comes just weeks after the Fed created the Supervision Climate Committee to assess climate-related risks that need to be addressed in its supervision of financial organisations.
The FSCC will assess climate-related risks across the financial system, considering the complex interactions that can take place.
In a speech, Fed Governor Lael Brainard said: “Given the implications of climate change for both individual financial institutions and the financial sector as a whole, we need a framework that incorporates both microprudential [related to financial supervision] and macroprudential [related to financial stability] considerations.”
She said that microprudential and macroprudential objectives were often a…