Senators Outline Key Actions Treasury Should Take on Economic and Environmental Crises Caused by Climate Change

Text of Letter (PDF)

Washington (September 25, 2023) - Senator Edward J. Markey (D-Mass.) joined Senators Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Martin Heinrich (D-N.M.), Sheldon Whitehouse (D-R.I.), and Jeff Merkley (D-Ore.) in sending a letter to Secretary of the Treasury Janet Yellen and newly-appointed Treasury Climate Counselor Ethan Zindler, urging the Treasury Department (Treasury) to take key actions pertaining to climate and climate-related financial risk to avert the impending environmental and economic crises.

“Since the Biden administration issued its Executive Order on climate-related financial risk in May 2021, Treasury and financial regulators have initiated important efforts to better understand the serious threat climate change poses to the financial system. While Treasury and U.S. regulators have made some progress, they still lag behind the progress in other countries. And unfortunately, recent climate disasters and financial disruptions reveal that climate change is outpacing efforts to get ahead of the risk… Treasury must quicken its pace and begin using all of the tools at its disposal, including its leadership of the Financial Stability Oversight Council (FSOC), to address the rising challenges, and align the financial system with a net-zero emissions future,” wrote the senators. 

“As climate financial impacts grow, the Climate Hub and Treasury must pursue with added urgency all available measures to address the climate crisis and its threat to the stability of our financial system…Particularly with its responsibilities for financial oversight and implementation of the IRA, Treasury is uniquely positioned to tackle challenges faced while promoting the opportunities of a clean energy economy,” they noted.

This letter follows Climate Counselor Zindler’s appointment to the role this summer, and comes on the heels of Secretary Yellen’s announcement at Climate Week in New York regarding Treasury’s new net-zero transition guidance for financial institutions.

In the letter, the senators outline critical actions Treasury should take, including: 

  • Working with the White House, the Environmental Protection Agency, and the financial regulators to help coordinate and disseminate broadly information about IRA opportunities, while addressing environmental justice, consumer protections, labor and equitable workforce development, and community engagement, accountability, and benefits.
  • Leading FSOC in finalizing and immediately beginning to use its recently proposed analytic risk framework and designation guidance for nonbank systemically important financial institutions, to allow for adequate federal supervision of nonbanks that are driving the unchecked growth of climate-related financial risk.
  • Playing a role in developing and encouraging the uptake of higher quality climate scenario analysis exercises for banks, grounded in climate science.
  • Office of Financial Research (OFR) expanding access to the Climate Data and Analytics Hub beyond staff of the OFR, the Federal Reserve, and the Federal Reserve Bank of New York to which the pilot is currently limited, in order to give access to all FSOC member agencies to public climate and financial data, high-performance computing tools, and analytical and visualization software.
  • Aligning financial institutions with the net zero transition and working to close gaps in its recently-published net zero transition guidance.
  • Investigating the extent to which abuse of 501(c)(3) and 501(c)(4) authorities is used to anonymize fossil fuel political obstruction of measures that could open a pathway to climate safety.

The senators are asking Treasury to answer a set of questions about its plans to fulfill these goals by October 12, 2023.