The hiring of Satyam Khanna to the newly created position of Senior Policy Advisor for Climate and ESG in the office of Acting Chair at the Securities and Exchange Commission (SEC) is “a critical step forward on the path to mandating climate risk disclosure and addressing climate change as a systemic financial risk,” said Steven M. Rothstein, Managing Director of the Ceres Accelerator for Sustainable Capital Markets.
Acting SEC Commissioner Allison Herren Lee announced the position today, saying “Having a dedicated advisor on these issues will allow us to look broadly at how they intersect with our regulatory framework across our offices and divisions. Satyam’s experience, insight, and resourcefulness will help ensure our efforts in this space are thoughtful and effective.” The move is in line with Commissioner Herren Lee’s history of leadership on climate change from within the agency.
Rothstein continued:
“We value Acting Chair Allison Lee’s leadership on climate risk disclosure, which is vitally important and sorely needed. Appointing an agency-wide coordinator to study it and move the agency toward more disclosure is a good thing—and bodes well for the future resilience of our economy. Satyam Khanna has substantial experience with the SEC, the Financial Stability Oversight Council at the U.S. Treasury Department, and in academia. We’re encouraged by his position on climate change, and are looking forward to working with him to address it as a systemic risk to our markets and our economy.”
U.S. markets are vulnerable to the impacts of climate risk, and it falls well within the SEC’s mandate to analyze and address those risks. A recent report from the Ceres Accelerator for Sustainable Capital Markets found that the U.S. banking sector was far more exposed to climate risk than banks are currently disclosing to regulators and investors, while a separate report issued more than 50 recommendations for financial regulator action on climate change -- including specific recommendations for the SEC. Investors with nearly $1 trillion in assets under management endorsed the report, and wrote to the then SEC Chair Clayton, urging the agency to act on its recommendations.
Ceres has engaged the SEC on climate risk disclosure for decades, and U.S. financial regulators have made recent strides to affirm the systemic risk of climate change to markets. The Federal Reserve included climate change in its list of destabilizing risks in a recent report, and has also joined the Network for Greening the Financial System (NGFS), a global climate working group of central banks.
In creating this position, the SEC joins other regulators rapidly moving to establish dedicated capacity to address climate risk. This month, the Federal Reserve established a new Supervision Climate Committee, and Treasury Secretary Yellen revealed plans to appoint a "very senior-level" official to lead climate efforts and establish a Treasury climate “hub.”
About Ceres
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. The Ceres Accelerator for Sustainable Capital Markets is a center within Ceres that aims to transform the practices and policies that govern capital markets in order to reduce the worst financial impacts of the climate crisis. It spurs capital market influencers to act on climate change as a systemic financial risk—driving the large-scale behavior and systems change needed to achieve a just and sustainable future, and a net-zero emissions economy. For more information, visit ceres.org and ceres.org/accelerator and follow @CeresNews.