Washington D.C. — The Board of the U.S. Federal Reserve System – the referee of the U.S. economy – released a set of draft principles with recommendations in December 2022 on how best to protect the U.S. financial system from catastrophic climate disasters that threaten the U.S. economy. The Fed invited public comment on these guidelines for only the larger U.S.- based banks, and 350.org and its supporters mobilized around the report. Our members sent an unprecedented 10,000 comments via email and fax over the last three weeks to ensure that the Fed is making climate change a bigger priority. While the proposed guidance is a starting point, activists are urging the Fed to do more in this time of climate emergency.
The significant number of comments submitted included:
- Request for large financial institutions to take meaningful action on protecting their customers and communities by divesting from fossil fuels
- Shift these “guidelines” to requirements, not recommendations
- Implement a timeline for banks to enact the requirements on mitigating climate risk
- An emphasis on the importance of managing transition risk by phasing out funding of fossil fuels and investing in sustainable energy projects, with particular attention to ensuring that new infrastructure and technology is accessible and affordable for all – particularly lower-income, frontline, and BIPOC communities.
- Urges the Federal Reserve to take steps to make sure that frontline communities are not forgotten, ensuring that climate risk assessments do not lead to divestment from BIPOC communities or any furthering of the inequities of historical redlining by banking and mortgage institutions.
Following the initial outpouring of public comments, the Fed provided additional details on how its pilot climate scenario analysis exercise will be conducted and the information on risk management practices that will be gathered by the six largest U.S. banks. While this development proves the Fed is paying attention to this overwhelming number of comments from climate activists, even their response shows the disconnect between the Fed’s attitude towards climate change and the true risks the climate crisis poses to all of us, including our economy.
Activists at 350.org and its affiliates 350 Wisconsin and 350 Colorado have been calling on the Federal Reserve to account for climate risk for the last two years, urging the Federal Reserve to end bank fossil fuel finance. Among our demands have been to:
- End Fossil Fuel Bank Finance by using regulatory tools to limit and phase down the financing of emissions.
- Divest the Fed’s spending and asset purchases from fossil fuels and invest in climate solutions.
- Urge banks to invest in climate solutions and work to limit global temperatures to 1.5 C, with an emphasis on lending to low income and communities of color.
Emily Park, campaign manager of 350 U.S. Fossil Free Federal Reserve Campaign and organizer with 350 Wisconsin made the following statement, “Understanding the role of the Fed and the role it can have on influencing climate finance is certainly wonky, but over the last two years, we have shed light for the public on why the referee of the U.S. economy must set clear requirements for all banks to divest from fossil fuels. With more severe climate impacts happening year by year, every single U.S. institution must do its part to protect communities from the worst of the climate crisis. That means that our financial institutions and banks need to stop funding fossil fuels that are directly causing climate chaos. In addition, our financial institutions need to start investing in climate solutions and supporting communities in a just transition to clean energy. The Fed has the power to make these changes happen. By mobilizing to submit over ten thousand comments on the Fed’s draft principles on climate risk, we are sending a clear message that our communities are watching and they are demanding change at every level.”
Jeff Ordower, North America Director at 350 U.S. said, “The financiers in suits think we’re not watching but we are. The Federal Reserve was bombarded with so many emails and faxes over the last few weeks and they even released additional details about their climate risk analysis. This is a true example that people power works. A message has been sent loud and clear to the Fed that people across the United States want a financial system that is just and fair, and that is contributing to real climate solutions, not smeared with dirty oil. A cleaner economy in the U.S. will also contribute to slowing the climate crisis in the most impacted communities around the world, including the Global South – a necessary contribution from the United States for their culpability in creating global climate chaos.”
To learn more about 350.org’s Fossil Free Federal Reserve Campaign, go here.
Press Contacts: Thanu Yakupitiyage and Melanie Smith, [email protected]