(AmericanProsperity.com) – US Treasury Secretary Janey Yellen said on Tuesday that climate change could lead to an economic decline and a significant decrease in asset values, to the point where it could severely harm the US financial system if the transition to renewable energy sources is disorganized and takes more time than needed. She also pointed out that climate change is already having an economic impact in the United States, citing extreme weather and natural disasters in different states of the country, including Louisiana, Florida and California.
The Treasury Secretary made her remarks at the first meeting of the Climate-Related Financial Risk Advisory Committee (CFRAC), which is an advisory board that was set up in 20222 by the US Financial Stability Oversight Council, as an effort to reinforce the country’s action to reduce the risks of climate change to the economy. Yellen’s alarmist remarks correspond to numerous assertions from other officials of the Biden administration who have also claimed that carbon emissions will have a negative effect on the US economy.
According to a federal government report released in 2022, climate-related disasters have already resulted in economic losses due to a decline in property values, disruptions to critical services and infrastructure damage. The report also disclosed that, on average, the United States encountered almost eight $1 billion in disasters every single year over the last four decades. However, that figure has surged to almost 18 events annually over the last five years.
The first meeting of the Climate-Related Financial Risk Advisory Committee takes place after the formal introduction of a final rule by the US Labor Department, which allows retirement fiduciaries to consider the “economic effects of climate change.” The regulation, which reverses a previous prohibition enacted under the Trump administration, aims to protect the financial security of American workers and families from climate-related financial risks.
Critics argue that the investment philosophy mixes social and political concerns, such as reaching a racially diverse society and reducing carbon emissions, in a way that compromises profitability. Under the Trump administration’s previous rule, retirement fund managers weren’t allowed to choose investments based on non-financial factors and were required to base their financial decisions on financial factors exclusively.
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