Secretary of the Treasury Janet Yellen recently reiterated her stance that climate change poses a threat to the U.S. economy.
“Climate change is an existential threat, and it is a very high priority of President Biden’s and of mine to address it,” Yellen told the Senate Banking Committee last week.
Yellen added that climate change is a “significant risk” to financial stability, along with activity in the shadow banking sector and over-leveraged hedge funds.
“FSOC [Financial Stability Oversight Council] is also doing work on that to assess, evaluate, coordinate regulators, work with them to make sure that they have the data that they need and that we develop the methodologies to examine that risk,” Yellen said.
The Federal Insurance Office, a branch of the Treasury Department, has issued a request for information to determine what risks climate change pose on the insurance sector and financial stability more broadly. Meanwhile, the SEC is reviewing whether or not to require companies to disclose climate risks.
Yellen has previously endorsed strengthening disclosures, which she believes will mobilize investment from the private sector to help facilitate the transition to a net-zero emissions economy.
While this transition is a key priority for the Biden administration, Yellen told the Senate Banking Committee that “no one is forcing banks or other financial institutions to make investments that they don’t think are profitable and desirable.”
“There is enormous interest in the financial community in making investments that will be profitable in sustainable investments,” Yellen said, “and what we want to do, and we’re working through FSOC to do this, is to make sure that investors have the kind of information that will enable them to make investment decisions that they want to make that are profitable.”
Yellen also responded to a question about the Biden administration’s plans to shift U.S. energy to be reliant on renewable sources by 2035.
“I don’t believe that the president’s program is going to lead to increases in the cost of energy,” Yellen said, referring to the fuel shortage and high gas prices in the UK and Europe more broadly.
She added that “in the case of the UK, there’s a question of what to do if the sun isn’t out and the wind doesn’t blow, and I believe there is storage technologies that can be deployed and, you know, other means to address that, and of course that has to be part of a plan to switch to renewables and address climate change.”
Grace is an assistant editor for Yahoo Finance and a UX writer for Yahoo products.