Remarks by Secretary of the Treasury Janet L. Yellen at the First Meeting of the FSOC Climate
U.S. Treasury Secretary Janet Yellen addressed the first convening of the Climate-related Financial Risk Advisory Committee (CFRAC) Tuesday, and she did not mince words about the clear and present danger mispriced climate risk poses to the global economy. “As climate change intensifies, natural disasters and warming temperatures can lead to declines in asset values that could cascade through the financial system,” she said, according to her prepared remarks. “And a delayed and disorderly transition to a net-zero economy can lead to shocks to the financial system as well.”
“These impacts are not hypothetical. They are already playing out. In the United States, there’s been at least a five-fold increase in the annual number of billion-dollar disasters over the past five years compared to the 1980s, even after adjusting for inflation. States like California, Florida, and Louisiana recently have seen especially severe storms and wildfires. And recent devastating tornadoes across the South and intensifying storms on the West Coast are reminders of how climate change is accelerating.”
“In addition to the terrible toll of these disasters on individuals and families, the economic and financial impacts of these events are significant. For example, in response to rising insured losses, some insurers are raising rates or even pulling back from high-risk areas. This has potentially devastating consequences for homeowners and their property values. Developments like these can spill over to other parts of our interconnected financial system.”
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