CFTC releases climate report, but agency notes it’s Behnam’s
The Commodity Futures Trading Commission on Wednesday released a report citing climate change as a major risk to the financial markets.
The report received substantial media attention but a spokeswoman for CFTC Chairman Heath Tarbert pointed out in an email that the report is a project “of Commissioner [Rostin] Behnam’s alone.“
Behnam is a Democratic commissioner and Tarbert is a Republican.
Rachel Millard, the CFTC spokeswoman, noted that the report contains the following language:
“This report is approved by the Subcommittee on Climate-Related Market Risk of the Market Risk Advisory Committee (MRAC). The views, analyses, and conclusions expressed herein reflect the work of the Subcommittee on Climate-Related Market Risk of the MRAC, and do not necessarily reflect the views of the MRAC, the Commodity Futures Trading Commission or its staff, or the U.S. government.”
The CFTC news release said the report, “Managing Climate Risk in the U.S. Financial System,” was released by the MRAC, but also pointed out that “the Climate Subcommittee voted unanimously 34-0 to adopt the report.”
Behnam, sponsor of the MRAC, noted: “Today would not be possible without the dedication and devotion of the Climate Subcommittee members. They spent tireless hours drafting an incredibly thorough report that has far exceeded expectations. I want to personally thank them for their work on this groundbreaking effort during unprecedented times.”
“As we’ve seen in the past few weeks alone, extreme weather events continue to sweep the nation from the severe wildfires of the West to the devastating Midwest derecho and damaging Gulf Coast hurricanes.
“This trend — which is increasingly becoming our new normal — will likely continue to worsen in frequency and intensity as a result of a changing climate,” Behnam continued.
“Beyond their physical devastation and tragic loss of human life and livelihood, escalating weather events also pose significant challenges to our financial system and our ability to sustain long-term economic growth. Now, with this report in hand, policymakers, regulators, and stakeholders can begin the process of taking thoughtful and intentional steps toward building a climate-resilient financial system that prepares our country for the decades to come.”
The report is the first of-its-kind effort from a U.S. government entity, Behnam added.
The news release said the report, which presents 53 recommendations to mitigate the risks to financial markets posed by climate change, concludes that:
▪ Climate change poses a major risk to the stability of the U.S. financial system and to its ability to sustain the American economy;
▪ Climate risks may also exacerbate financial system vulnerability that have little to do with climate change; including vulnerabilities caused by a pandemic that has stressed balance sheets, strained government budgets, and depleted household wealth;
▪ U.S. financial regulators must recognize that climate change poses serious emerging risks to the U.S. financial system, and they should move urgently and decisively to measure, understand, and address these risks;
▪ Existing statutes already provide U.S. financial regulators with wide-ranging and flexible authorities that could be used to start addressing financial climate-related risk now;
▪ Regulators can help promote the role of financial markets as providers of solutions to climate-related risks; and
▪ Financial innovation is required not only to efficiently manage climate risk but also to facilitate the flow of capital to help accelerate the net-zero transition and increase economic opportunity.
“I was amazed and gratified that the CFTC asked for this report, and I was honored to chair the subcommittee, but I think what is most unique about this effort is that more than 30 financial market participants agreed on so much,” said Bob Litterman, the subcommittee chairman and founding partner and Risk Committee Chairman of Kepos Capital.
Senate Agriculture Committee ranking member Debbie Stabenow, D-Mich., also praised the report.
“The climate crisis poses serious risks to our economy and our livelihoods. This groundbreaking comprehensive report comes at a critical juncture for our country and includes important recommendations that will help protect our economy from the climate impacts we’re already seeing,” Stabenow said in a news release.
“I commend Commissioner Behnam for his proactive leadership that will help safeguard the stability of our financial sector.”
Behnam is a former Stabenow aide.
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I want to address a couple of issues in this week’s editor’s note.