Yellen presses for more climate disclosures, zeroes in on insurance

WASHINGTON — The Treasury Department hosted an interagency panel discussion on local efforts to combat climate change, part of the Biden administration’s campaign to demonstrate how infrastructure spending is aiding its climate goals.

While the panel didn’t address hot-button financial issues such as climate stress scenarios for banks, it did highlight the Biden administration’s deployment of key figures, including Treasury Secretary Janet Yellen, to show the administration’s economic efforts on climate finance, even as some within the Democratic party urge more concrete and specific action. Climate finance has also emerged as a contentious issue in the Federal Reserve nomination of Sarah Bloom Raskin, whose nomination for regulation chief is currently being held up by Senate Republicans.

Yellen, in opening remarks on the panel, said that the Treasury Department’s Federal Insurance Office will release a report by the end of the year on climate-related insurance supervision that considers potential gaps in regulation, a move initially announced two weeks ago. The office, she said, is “trying to answer questions like whether climate-related weather events have impacted the availability of insurance coverage, especially in high-risk areas and for traditionally underserved communities.”

Yellen also said that the Treasury wants to “promote the resilience of financial markets — including municipal markets — to climate-related financial risks.” In doing so, she said that enhanced climate disclosures could help market participants make better decisions.

“A key challenge here is imperfect information — understanding the risks and opportunities climate change presents,” she said.

Yellen also emphasized the role that private firms could play in moving toward a clean energy economy, a key part of the Biden administration’s climate finance pitch. Previously, the Treasury Department has pressed financial institutions to embrace a “greater sense of urgency,” regarding investing in a “net-zero economy," an effort led in part by John Morton, a former private equity adviser and Treasury’s climate adviser who led the panel discussion.

“Increasingly, private investors recognize the enormous opportunities embedded in the transition to a net-zero economy,” Yellen said at the panel. “Firms responsible for approximately $130 trillion in global financial assets have committed to net zero by midcentury.”

She said that connecting that capital to local projects “will be vital to ensuring that we can meet the climate challenge.”