There’s an adage meant to motivate perceived underdogs: If someone in power dismisses your worry, start over at a higher level.
In the business world, such a mischievous attitude is doomed to ruffle feathers and make enemies. But it appears to be an inescapable strategy to combat climate antagonists in Washington.
If this sounds like a guerrilla tactic, there is some truth to it. A group of 145 organizations, which probably did not get the desired response from the targeted banks, last week written to John Kerry, President Joe Biden’s special climate envoy, seeking his support in halting Wall Street funding for fossil fuel activities.
“We must recognize that Wall Street is not yet an ally,” they wrote. “As long as American businesses continue to spend more money on the drivers of climate change, they will actively undermine President Biden’s climate goals.”
A State Department spokesperson said the US government does not have enough resources to tackle the climate crisis on its own and needs the public and private sectors to help finance its climate agenda, Bloomberg reported.
The next level technique may not work often, but grassroots organizers aren’t the only ones using it. Career officials can also play along.
Senator Pat Toomey, R-PA, Senior Member of the Senate Banking Committee, sent a letter last week to Mary Daly, head of the San Francisco Fed, for details on the central bank satellite bi-weekly virtual seminars on climate economics and asking for an overview of spending a decade on community research and development.
This research into politically charged issues such as climate change and racial justice efforts, Toomey argued, runs counter to the independence of the Fed and constitutes a “creeping mission” in territory already covered by it. other federal entities.
The San Francisco Fed and other Fed banks “have written social studies essays dealing with, among other things, health insurance and essential service workers in New England (for which we have a ministry of Labor, a Commission for Equal Employment Opportunities and National Labor Relations Board of Directors); the relationship between race, type of work and Covid-19 infection rates (this for what we have a Department of Health and Social Services); [and] crowded housing (something for which we have a Department of Housing and Urban Development), “Toomey wrote.” While this research may be commendable, the Federal Reserve is devoting significant federal resources to efforts that are meant to be … non-partisan. “
The climate isn’t the only polarizing issue at play. Raphael Bostic, Atlanta Fed chief, told CNN last week “There are certainly merits” to remedies for inequality “in the sense that, if people have been wronged by the laws, then there should be a discussion about redress.”
“Today we have African Americans who have much less wealth, in part because they were not able to inherit the wealth that would have accumulated if their ancestors had been able to accumulate that wealth,” did he declare.
Bostic’s comments follow a work document the Minneapolis Fed published on the subject in February.
The crux of Toomey’s message is this: If this is how the Fed banks spend the money we give them, maybe they don’t need the money.
This is a low probability shot. How likely is he to persuade enough fellow lawmakers to approve a smaller Fed research budget?
Nonetheless, there has been a rapid escalation in the discussion about the appropriate venue for climate change research.
“The Federal Reserve – we’re not climatologists, we don’t have the toolkit of how we’re set up, in our structure, to tackle climate change, but we’re absolutely responsible for understanding of climate risk, ”said Daly. in a speech at the end of March, according to Bloomberg.
Take this concern to a higher level.
Chris Waller, Governor of the Federal Reserve, in a question-and-answer session following a speech the day Toomey sent his letter to Daly, said climate change was “the job of Congress” and that the Fed’s research was limited to how it might affect the central bank’s maximum twin missions. employment and stable prices.
“All we’re doing is studying it, trying to understand its impact on the economy and what it would mean for both economic stabilization or regulatory actions,” Waller said on March 29, according to Bloomberg. .
Toomey, in his letter, noted that each of the Fed’s 12 satellites has a research department, and studies sometimes overlap. He added that the Fed’s board of directors also has a research department – “as does the Federal Stability Supervisory Board through the Office of Financial Research.”
Stop there. Take Waller’s lyrics to a higher level.
Two days after Toomey’s letter to Daly, Janet Yellen convened the Financial Stability Supervisory Board (FSOC) for the first time since becoming Secretary of the Treasury and outlined the group’s priorities – in the presence of the chiefs from several regulatory agencies.
Yellen said she was setting up a “climate hub” at the Treasury Department focused on “opportunities for climate finance to support the economy’s transition to net zero carbon emissions,” American banker reported.
“We can’t just look back and learn from the lessons of last year. We also have to look to the future, the emerging risks. Climate change is obviously the most important,” Yellen said said last week. “It is an existential threat to our environment, and it poses a huge risk to the financial stability of our country.”
Also, Yellen Tuesday, before remarks she is set to deliver at a virtual meeting of global finance ministers, said she seeks to use regulatory coordination to face the risks of climate change for financial institutions and aims to encourage companies to “align their portfolios and strategies” with the 2015 Paris Agreement, Bloomberg reported.
Many of the regulators that make up the FSOC have taken steps over the past year to synchronize on tackling climate change. The Federal Reserve, for example, has dedicated two panels to study and manage its risks and joined the Network for Greening the Financial System (NGFS).
Last year, Rostin Behnam convened a Commodity Futures Trading Commission (CFTC) climate risk subcommittee which suggested force companies to pay for their greenhouse gas emissions. He is now the acting head of the regulator.
As tempting as it may be to see Yellen, herself formerly head of the San Francisco Fed, rushing to champion climate change as a research topic, the FSOC meeting and its agenda were likely in the works long before Toomey’s office began writing Daly.
And even if the central bank-related climate change research were limited to FSOC-led efforts, Toomey would still have a rebuttal.
“I remain concerned that FSOC members may seek to advance a progressive social agenda on global warming, which goes beyond their respective missions and authorities,” he said on Wednesday. according to the Wall Street Journal. “This effort is not grounded in science or economics, but rather is a self-fulfilling prophecy: pretend there are future regulatory risks for carbon-intensive industries, then use unelected financial regulators and irresponsible for imposing regulatory costs on these activities. “
For Toomey, the barrier is probably the problem, not the place. But, intentionally or not, it helps advance the discussion on climate risk.