The Biden administration plans to nominate for the position of Securities and Exchange Commission (SEC) Chair Gary Gensler, a proven leader who will “enter their new role at a time of critical importance, as unchecked climate risk threatens to destabilize our economic system” said Mindy Lubber, CEO and president of the sustainability nonprofit organization Ceres.
Lubber continued, “We welcome the news of Gary Gensler’s nomination, and hope he will bring changes to the SEC to ensure the U.S. markets are resilient in the face of climate change. Given the alarm bells being sounded by investors, companies, regulators, policymakers, and advocacy groups like Ceres, Mr. Gensler will enter his new position with a clear mandate, and clear expectation, to act on the climate crisis. One crucial thing that he can do is establish mandatory, consistent, industry-wide rules for climate change disclosure immediately. This would send a clear market signal across every sector of the economy, and communicate that understanding and mitigating climate risk is critical to the financial stability of our country. This is well within the SEC Chair’s mandate, and has precedent abroad as well.”
With his impressive track record at the Commodity Futures Trading Commission and U.S. Department of the Treasury, Gensler is uniquely placed to galvanize strong inter-agency collaboration on the study and regulation of climate risk, to protect investors and the public.
In June, the Ceres Accelerator for Sustainable Capital Markets issued the report Addressing Climate Change as a Systemic Risk: A Call to Action for U.S. Financial Regulators, which found climate change poses a systemic threat to U.S. markets and recommended more than 50 action steps agencies, including the SEC, can take without any new legislation. One month later, investors with nearly $1 trillion in assets endorsed the report and wrote public letters to the heads of financial regulatory agencies like the Federal Reserve and the SEC, urging them to heed its recommendations.
In October, the Ceres Accelerator issued Financing a Net-Zero Economy: Measuring and Addressing Climate Risk for Banks, which found that the U.S. banking sector is significantly more exposed to climate risk than banks are currently disclosing to investors—highlighting the way this lack of disclosures exposes the U.S. economy to potentially destabilizing risks.
In November, for the first time ever, Federal Reserve Chairman Jerome Powell affirmed that climate action falls within the mandate of the Federal Reserve, and his agency included climate change in its list of risks to financial stability in a semiannual report and later was accepted into the Network for Greening the Financial System - a global climate club for central banks.