Fed’s Brainard Highlights Risks Banks Face From Climate Change

Federal Reserve Governor Lael Brainard said climate change and an economy-wide transition to green energy could prove disruptive for financial institutions if they don’t start preparing for those risks now.

Brainard, a member of the Fed board’s committee on supervision and regulation, said in a speech Thursday that financial institutions face physical risks from severe weather events caused by climate shifts, and transition risks as changes in policy, technology or consumer behavior lead to a lower-carbon economy.

Lael Brainard

Photographer: Andrew Harrer/Bloomberg

“These physical and transition risks could materialize as traditional financial risks to supervised institutions, including through increased credit, market, operational, reputational, and ...