Climate change is a systemic threat to the U.S. financial system, according to a new report from the U.S. Commodity Futures Trading Commission advisory panel. All of the group’s 35 members approved the report, which recommends a price on carbon and a rewrite of financial market rules.
John Tobin is professor of practice at the SC Johnson College of Business at Cornell University, an expert on environmental and energy economics and a faculty fellow at the Cornell Atkinson Center for Sustainability. He says the report indicates a future of business and markets that takes climate change seriously and adapts to its risks.
“It is remarkable that, even in the current political climate in the United States, all 35 members of a panel brought together by the U.S. Commodity Futures Trading Commission to address systemic risks to the financial system posed by climate change have approved the panel’s report. Even more remarkable is that the report’s recommendations are not watered-down suggestions drafted to overcome the objections of private-sector members: indeed, the very first recommendation in the report is, quite simply, to put a price on carbon to disincentivize fossil fuel consumption.
“This is yet one more indication of the fact that those who are seriously looking at climate-related risks recognize that it is in their interest to adapt to the changing times or they risk being left behind. Policy inaction in the U.S. can only protect U.S. business so much if the rest of the world economy is actively managing climate risk. If U.S. business is to compete effectively and succeed in the new markets being created by government actions on climate in the rest of the world, there is simply no alternative.”