May 20, 2020

Casten Urges CFTC to Include Casten-Led Climate Priorities in Market Risk Advisory Committee Report

Downers Grove, IL – U.S. Representative Sean Casten (IL-06) submitted a comment letter to the Commodity Futures Trading Commission (CFTC) Climate-Related Market Risk Subcommittee Chair Robert Litterman urging the subcommittee to include polices from two Casten-led bills, H.R. 3623, the Climate Risk Disclosure Act and H.R. 5194, the Climate Change Systemic Risk Act, in his final report to the Market Risk Advisory Committee.

Casten and U.S. Senator Elizabeth Warren (D-Mass.) introduced H.R. 3623 the Climate Risk Disclosure Act of 2019 to require public companies to disclose critical information about their exposure to climate-related risks. The legislation would help investors appropriately assess climate-related risks, accelerate the transition from fossil fuels to cleaner, and more efficient energy sources, and reduce the risks of both environmental and financial catastrophe. The bill passed out of the House Financial Services Committee in July of 2019.

In November, Casten and U.S. Senator Brian Schatz (D-HI), introduced the Climate Change Financial Risk Act of 2019. The legislation would direct the Federal Reserve (Fed) to conduct stress tests on large financial institutions to measure their resilience to climate-related financial risks.

The letter said in part, "I believe there are ample opportunities to improve integration of climate related scenario analysis, stress testing, and disclosures into financial and market risk. Climate change is a source of financial risk…Through rising sea levels, more frequent extreme weather patterns, water shortages, increased resource scarcity, and its many other effects, climate change directly threatens valuable company assets. It is also changing long-term climate patterns in ways that will lower labor productivity, devalue and destroy fixed assets, stress agricultural yields, and ultimately affect every sector of our economy. These impacts are likely to exacerbate market volatility and erode investor confidence, ultimately increasing systemic risk… It is clear that disclosing and understanding the impacts of these risks are critical for preparing companies and the economy for addressing the climate crisis, and I urge you to include both policies in your report."

Full text of the letter can be found here.