Climate change

In an executive order signed Thursday, the president is asking the Financial Stability Oversight Council to create a strategy for quantify the risks global warming pose to financial stability.

During a House Financial Services Committee hearing, Democrats largely praised the policy decisions of acting regulators named by the Biden administration and knocked their predecessors. But Republicans warned that moves to reverse Trump-era policies would leave financial institutions without a clear road map.

Setting a tougher tone than Trump-era regulators, acting Comptroller of the Currency Michael Hsu warned against excessive risk-taking during the economic recovery and called for better interagency coordination on fintech standards.

After much anticipation, the Federal Reserve last year finally joined the Network for Greening the Financial System, which develops regulatory best practices for combating climate risks. But all U.S. banking regulators must participate for the effort to succeed, some observers argue.

Regulators around the world are exploring how to assess banks' exposures to climate change risks. But they'll have to tackle legal, economic and modeling problems that don’t have obvious solutions.

The greenhouse gas emissions associated with financial institutions’ investing, lending and underwriting activities are more than 700 times higher, on average, than their direct emissions, a report concludes.

Accounts payable is one of the most paper-intensive business functions, with lots of room for more environmentally sound processing, Daniel Ball of Medius says.

Morgan Stanley was also among 43 banks worldwide to sign on as initial members of the Net-Zero Banking Alliance. Convened by the United Nations, the group has pledged to help clients in carbon-intensive industries — including transportation, mining and agriculture — reduce their reliance on fossil fuels.

House and Senate GOP members have stepped up criticism of a plan to include banks in a global push to cut emissions, saying it could cut off financial services access for energy and fossil fuel companies.

JPMorgan Chase set a goal to finance $2.5 trillion in initiatives that combat climate change and advance sustainable development over the next 10 years, while Citigroup said it would back $1 trillion of similar efforts by 2030.

Bank of America, which has had an environmental business goal since 2007, is significantly increasing its current commitment.

It's no longer a matter of if, but when, regulators will require banks to document the impact of global warming on their loan portfolios and other operations.

Dozens of European and U.S. banks are considering throwing their weight behind the White House’s Earth Day summit under plans being drawn up by former Bank of England Gov. Mark Carney.

President Biden plans to direct his administration to develop a strategy on climate-related risks for public and private financial assets, according to a draft document seen by Bloomberg News.

Policymakers have scrutinized social disparities in the financial system and banks' climate-change risks. That has led to a new line of attack from Republicans who say agencies such as the Federal Reserve should stay in their lane.

Treasury Secretary Janet Yellen conducted her first meeting as chair of the Financial Stability Oversight Council and set the stage for a potential recalibration of the panel's role after it was weakened in the Trump administration.

Climate groups are calling on John Kerry, the special presidential envoy for climate, to shut off the flow of money from Wall Street to the fossil-fuel industry and acknowledge the role of U.S. finance firms in warming the planet.

Activist investors are pressuring big banks to further curtail lending to the fossil-fuel industry, undergo so-called racial-equity audits and disclose more about their lobbying practices and financing of nuclear weapons manufacturers.

Sen. Pat Toomey, R-Pa., warned the regional Federal Reserve bank that its papers about environmental, social and corporate governance policies hurt its ability to stay neutral on partisan issues.

The move is part of a broader push at Citigroup to reduce carbon emissions. Jane Fraser, who took over as CEO on March 1, vowed on her first day that the bank would achieve net-zero greenhouse gas emissions in its financing activities by 2050.