Every investor and investment manager who recognizes the importance of managing risk should read the U.S. Commodity Futures Trading Commission report - Managing Climate Risk in The U.S. Financial System.
It concludes that climate change poses a severe threat to financial systems and that financial regulators must address these risks immediately. The number #1 priority highlighted in the report is to put a price on carbon. It further emphasizes the importance of climate-related disclosures by companies, states ESG investments do not necessarily involve financial trade-offs, and calls for international engagement on climate-related financial risk, among other matters. These recommendations align well with Greenleaf’s recent report: Addressing Climate Change Using a Carbon Tax & Dividend Plan Within a Global Compact, to achieve rapid, effective, and just climate risk mitigation at scale.
We congratulate the report’s Chair, Bob Litterman, and its contributors on bringing clarity to the stark risk facing financial markets from climate change and recommending pathways for the financial community to mitigate that risk.
John A. Andersen, Jr.