Central Banker Calls on Financial Firms to Address Climate Change; Is That Their Job?
It wasn’t that long ago that company executives were tasked with being good stewards of shareholder capital, growing the business as much as possible while staying within the confines of the law. Customers could reward or punish companies by purchasing more or less of their stuff.
Now authorities and politicians from many areas are calling on corporate executives to do more, like address climate change.
Fed Governor Lael Brainard, in remarks to an Institute of International Finance forum on the move to a low-carbon economy, said financial firms faced risks not just from weather-related disasters, but also potentially fast changes in asset prices if and when government policies change.
Brainard said:
“While the scientific evidence for climate change is unequivocal, estimates of the magnitude of climate-related financial risks are highly uncertain. This residual uncertainty should not stand in the way of making prudent investments in risk-management practices in the near term.”
Hmm… If we read this correctly, she claims that climate change is obvious, but the effects are not, yet businesses should take steps to mitigate risk anyway.
Here’s a question. If the risks aren’t knowable, then how can prudent steps exist? And why would we ask financial firms to make such judgments? Okay, that was two questions, but you get the point.
