ANALYSIS: CFTC Committee Recommends Steps to Slow Climate Risk

Due to the major risk that climate change poses to the stability of the U.S. financial system, regulators should make new demands of banks and other financial institutions, a Commodity Futures Trading Commission (CFTC) advisory subcommittee report has concluded. The report also emphasized the importance of establishing an economy-wide price on carbon, which would require legislative action.

The report stated that regulatory agencies should consider mandatory disclosure requirements for material climate risk information. Financial institutions should also be required to include climate-related risks in their current risk management frameworks, according to the subcommittee.

The report provides several recommendations for financial ...