Chairman Jerome Powell said the Federal Reserve would not make policy related to climate change, a response to Republican warnings that the Federal Reserve was going beyond its remit to push green policies.
Powell, in a speech Tuesday, stressed the importance of keeping the Fed within the bounds of its congressional mandate, which is to focus on keeping inflation at a healthy level and pushing for full employment. Some Democrats have tried to pressure the Fed to act on climate change, and Powell’s speech is a key sign that he has no intention of doing so.
“Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals,” Powell said.
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“We are not, and will not be, a ‘climate policymaker,'” he added.
Still, the Fed has waded into the climate fight a little bit.
The Fed announced last month that it is soliciting public comment on the proposal for what it characterizes as a “high-level framework” for financial institutions with more than $100 billion in total assets to manage financial risk associated with climate change.
The framework would address both physical risks associated with the changing climate, in addition to transitional risks, which come as companies move away from fossil fuels. The guidelines would cover governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis, according to the Fed.
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The Biden administration and some Democrats have tried to overhaul financial regulations to account for climate change, including in ways that could pressure the private sector to move away from fossil fuels.
Republicans have pushed back on that pressure and asserted that banks and other financial institutions should stay out of the fight against climate change as such intervention violates their mandate to return shareholder value to clients.
