SSN Public Comment

Principles for Climate-Related Financial Risk Management for Large Financial Institutions

Policy field

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University of Wisconsin-Madison

Below is an excerpt from a public comment submitted to the Federal Reserve System in regards to the "Principles for Climate-Related Financial Risk Management for Large Financial Institutions" on  February 5, 2023.

Thank you for the opportunity to comment on the draft principles intended to support large financial institutions in managing climate-related financial risks. This comment responds to questions #1 and 2, as listed in the Request for Comment, by pointing to ways that the draft principles could better address challenges raised by climate-related financial risks, and other aspects of climate-related financial risks that the Board should consider.

As a professor at the Nelson Institute for Environmental Studies at the University of Wisconsin Madison, I am a social scientist whose research focuses on environmental governance, particularly of industrial expansion, including oil and gas pipelines. One of my recent publications shows that private-sector financial institutions may not be able to self-regulate adequately in order to avoid long-term severe financial risk. Moreover, beyond direct material impacts from climate change, which the draft principles discuss, climate change-related risks also include stranded assets, and social activism in response to fossil-fuel infrastructure.