Ahead of August 26-28 Economic Policy Symposium, communities demand Federal Reserve codify climate responsibility, urge Biden appoint a climate champion as Fed Chair
USA — As part of a global movement demanding banks, insurers, and financial institutions stop the money pipeline to fossil fuels, 350.org is launching the Fossil Free Federal Reserve campaign.
The campaign demands President Joe Biden appoint a climate champion as Fed Chair, and for the Federal Reserve to:
- End bank fossil fuel finance: Use existing regulatory and supervisory tools to begin limiting and phasing down the financing of emissions.
- Divest and invest: Align Fed spending and asset purchases with the Paris Climate Agreement’s goal of limiting temperature rise to 1.5°C
- Push banks to invest: Encourage and support bank investment aimed at limiting global temperature rise to 1.5°C, with a particular emphasis on lending to low-income communities and communities of color.
“Building a Fossil Free Federal Reserve is a key tool in our climate recovery toolbox,” said Tracey Lewis, Senior Climate Finance Policy Analyst with 350.org. “We’re launching this campaign because climate chaos is a disaster for all of us, including the economy. Not only does the Fed have legal authority to stop fossil fuel finance — it’s their responsibility.”
Current Federal Reserve Chair Jerome Powell’s tenure ends in February, with reappointment or nomination to be solidified by January 2022. Biden is expected to make an announcement as early as Labor Day. To date, over 20,000 people have signed a petition calling on Biden to appoint a climate champion as Federal Reserve Chair.
As recently as last week at a Congressional Committee hearing, amidst record-breaking heat, deadly flooding, and intensifying wildfires, Powell doubled down on his climate action delay, asserting that incorporating the risks of climate change into financial systems is ‘not a top priority.’
During the COVID-19 pandemic, 46 fossil fuel companies received $828 million in loans under the Federal Reserve’s “Main Street” pandemic lending program, over 13 times what was loaned to renewable energy.
“Jerome Powell continues to finance climate destruction instead of supporting Black and Brown communities on the frontlines of COVID-19, racial and economic injustice, and climate devastation,” said Lewis.
According to Positive Money’s Global Central Bank Scorecard, the Fed got a D-, near the bottom among the G20 Central Banks, when evaluated on its comprehensive climate risk policies related to the Paris Agreement, including financial policy and leading by example.
In a supplement to the scorecard, U.S. climate and financial regulatory advocates detailed how the Federal Reserve had failed to use the powers it has to address the climate crisis.
In April, 64 environmental and financial advocacy organizations sent a letter to Chair Powell, urging him to act on climate-related risk and investment. U.S. Reps. Mondaire Jones (D-NY) and Rashida Tlaib (D-MI) spearheaded a similar letter demanding the Federal Reserve move more rapidly and boldly on managing climate risks to the financial system.
Earlier this month, following 18 months of sustained protests, petitions, open letters, and more, the European Central Bank (ECB) announced it will incorporate climate in assessing risk and setting monetary policy.
“While the ECB begins to act on fossil fuels as a direct risk to our climate and financial systems, the Fed dangerously abdicates responsibility,” Lewis remarked. “Ending fossil fuel finance is about global justice.”
Today’s Fossil Free Federal Reserve campaign launch comes ahead of the August 26-28 Economic Policy Symposium in Jackson Hole, Wyoming, where financial decision-makers, including current Federal Reserve Chair Jerome Powell and ECB President Christine Lagarde (TBC), will gather to discuss “Macroeconomic Policy in an Uneven Economy.”
In May, Biden issued a broad-ranging Executive Order (EO) titled “Climate-Related Financial Risk,” directing Treasury Secretary Janet Yellen, National Climate Advisor Gina McCarthy, and Director of the National Economic Council Brian Deese to develop climate finance action plans ahead of November’s COP26 in Glasgow.
“We the people are rising up to demand bold policies that shift power away from fossil fuel billionaires toward our communities,” Lewis added. “We call on Biden, Secretary Yellen, and the Senate to appoint a real climate leader who will re-imagine the role of the Federal Reserve in climate and economic recovery.”