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$1 Trillion Investor Group Demands Climate Action From Regulators

CalSTRS and the New York retirement systems were among the 40 investors calling for regulatory action on climate change.

Investors including California’s $246 billion teachers’ pension fund sent letters Tuesday to the heads of the U.S. Federal Reserve, Securities and Exchange Commission, and other major financial agencies calling for regulatory action on climate change.

The letters — signed by 40 investors representing nearly $1 trillion in assets under management — ask the regulators to “address climate change as a systemic financial risk” and “explicitly integrate climate change across [their] mandates.”

The group called on the Federal Reserve to consider steps outlined by climate advocacy group Ceres, which coordinated the campaign. For the Fed, these steps included exploring how climate risk can be addressed through monetary policy and requiring financial institutions to conduct climate stress tests.

Meanwhile, recommendations for the SEC included mandating corporate climate risk disclosure and ruling that investor consideration of environmental, social, and governance risk factors is consistent with fiduciary duty.

Similar letters went to the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission, the Federal Insurance Office, the Federal Housing Finance Agency, the Financial Stability Oversight Council, and various state insurance regulators, according to Ceres.

“You lead a critically important agency that has a mandate to protect US market stability and global competitiveness,” the letter to Fed Chairman Jerome Powell stated. “This carries with it a responsibility to act on the climate crisis right now, and guide our transition to a net zero future.”

In addition to CalSTRS, signees included the New York State and New York City comptrollers, Seattle City Employees’ Retirement System, William and Flora Hewlett Foundation, and Maryland state treasurer Nancy Kopp. The letters were also endorsed by businesses, former regulators, politicians, and nonprofit groups.

“It has become painfully clear how vulnerable our economic system is to systemic threats,” Kopp said in a statement. “Climate risk presents significant risks to our financial system, with the potential to compound with other crises in ways that could spell catastrophe. These risks are manifesting right now, and we need regulatory action to manage them.”

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