Heading for a second term, Fed Chair Jerome Powell bucks a global trend on climate change

By | January 16, 2022

Inside Climate News reports:

Many of the questions Jerome Powell faced at his Senate confirmation hearing last week would have been familiar to any Federal Reserve chair on Capitol Hill: Where is the economy heading? What about inflation? How fast could interest rates rise?

But Powell, who is seeking his second term, also confronted a question that underscored the profound changes that could be ahead for both the economy and the powerful financial institution he leads: How does the Fed plan to address the economic risks posed by climate change?

Around the world, central bankers have begun to factor such risks into their decision-making process aimed at maintaining the safety and stability of their economies. In 2019, the Swedish Central Bank sold off bonds it held in the Canadian province of Alberta and parts of Australia, citing the risk posed by the economies’ high greenhouse gas emissions. The central banks of China, India, South Korea and New Zealand have sought to increase their purchases of “green” bonds. Last year, the Bank of France announced it would end investments in coal and reduce its oil and gas holdings by 2024. And the Bank of England last year embarked on its first comprehensive “stress test” of the British financial system’s ability to manage climate change and the transition to a net-zero economy, with publication of the results expected in May.

But the U.S. Federal Reserve under Powell, who took over as chairman in 2018 after being tapped by President Donald Trump, has done little beyond acknowledging the risks of climate change and studying its role. In a report card last year, progressive environmental groups led by Oil Change International concluded that the Federal Reserve, arguably the most powerful central bank in the world, had done less on climate than any other major central bank. [Continue reading…]

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