GOP senators to Federal Reserve: Stop climate activism
BY: EMMA DUMAIN | 05/18/2023 06:32 AM EDT
The lawmakers said they are getting “increasingly frustrated” by the Fed’s climate work.
E&E DAILY | Nine Senate Republicans are calling on the Federal Reserve to back off from climate action, arguing that environmental activism is not within the central bank’s jurisdiction.
“We are growing increasingly frustrated with the Federal Reserve’s … engagement on environmental policymaking and research far outside of its statutory mandate, all while there is persistent inflation and a crisis of confidence in the banking sector,” the senators, led by Sen. Dan Sullivan (R-Alaska), wrote in a May 17 letter to Fed Chair Jerome Powell.
They continued, “We urge you to rein in the Fed’s regional banks and its economists who are seemingly ignoring your leadership. The Fed’s credibility hangs in the balance, and without a course correction, history will find you either complicit or ineffective as Chairman.”
The Republicans cite a Fed-run “pilot climate scenario analysis exercise that will be collecting information from the financial sector’s largest institutions in order to ‘deep[en] [the] understanding of climate risk-management practices and buil[d] capacity to identify, measure, monitor, and manage climate-related financial risks.’”
Within that pilot program, the senators continued, banks would be required to report on transition risks defined as, they said, “the political risks on bank operations and investments that would be affected by a move to net-zero greenhouse gas emissions by 2050 … [though] no law passed by Congress and signed by the President defines any net zero goals.”
They conclude that the Fed, in laying out these mandates, is establishing “policy masquerading as ‘risk analysis,’” where “bank activities that do not further the goals of net zero by 2050 are inherently risky and disfavored.”
Notably, this letter is not a request for information or documents. Largely, it seeks to make a political statement.
The lawmakers are echoing on a common refrain among the GOP as of late: that responding to climate change is a radical pursuit that picks industry winners and losers and that government entities should be required to stay neutral in the debate over the future of energy.
Republicans are railing against the environmental, social and governance (ESG) investing movement, holding hearings and convening working groups in the House to target the practice they say is designed to drive dollars away from the fossil fuel sector.
Proponents of ESG investing counter that financial advisers have always looked for the best risk-adjusted returns, and sometimes that means turning away from companies or industries — such as oil and coal — at most risk from the clean energy transition.
Likewise, environmentalists are prone to argue the climate crisis is one that will touch every corner of society.
Sen. Sheldon Whitehouse (D-R.I.), the chair of the Senate Budget Committee, has prioritized a series of hearings in his panel this year to examine the implications of global warming on the global economy, the health care system and mortgage rates, among other things.
Alongside Sullivan, Republicans signing the letter include Idaho Sens. Mike Crapo and Jim Risch, as well as Sens. Kevin Cramer of North Dakota, Mike Braun of Indiana, Joni Ernst of Iowa, Roger Marshall of Kansas, Ted Budd of North Carolina and Mike Lee of Utah.