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Climate x FinReg Roundup:
December 7th

This weekly news roundup highlights noteworthy developments at the intersection of climate change and financial regulation.

Banks

Despite their pledges to combat climate change, “the world’s biggest banks are making clear they plan to stand by their fossil fuel clients.”

  • “In total, global banks led by [Wall Street’s largest banks] have helped fossil-fuel companies issue almost $250 billion in bonds so far in 2021, a figure that also broadly matches average annual fundraising for the industry since 2016.”

  • Wells Fargo, a member of the Glasgow Financial Alliance for Net Zero, still lends the most of any bank to fossil-fuel companies, and “is on track to double the amount of credit it has granted to the sector this year.”

Congress

President Biden’s Build Back Better Act contains a provision that would allocate $29 billion to the EPA to establish a “Greenhouse Gas Reduction Fund.” The goal: to further climate justice for low-income and marginalized communities through green finance.

  • At least $8 billion will be dedicated specifically to “low income and disadvantaged communities.”

  • However, some of the details are unresolved, including how the EPA will manage the fund, and how it will allocate the money. Some support issuing multiple grants to a variety of direct recipients, while others want the EPA to issue one large grant to support a national climate bank.

The Federal Reserve

In a hearing before the House Financial Services Committee, Fed Chair Jerome Powell fielded questions from House members about how the Fed plans to address climate change.

  • Powell said the Fed did not plan on joining the Office of the Comptroller of the Currency’s pending guidance to banks on climate risk management:

    • “We are very much tracking and in discussions with the OCC. I think we will move to … provide guidance, and I think we all want—all the agencies want—to have consistent or identical, ideally, guidance. I don’t think we will be in a position to join this specific guidance at this time but we’ll get there.”

  • In response to questioning from Rep. Rashida Tlaib (D-MI), Powell also said that the Fed would not incorporate climate change in its monetary policy, at least in the short term.

Other Items of Interest

  • The EU’s Sustainable Finance Disclosure Regulation (SFDR)—which aims to curb greenwashing from asset managers and financial advisers—has now faced multiple delays in its implementation.

  • A group of financial institutions, including Deutsche Bank, Bridgewater, Glass Lewis, and HSBC, have launched ESG Book, a data platform that aims to “make[ ] sustainability data more available and comparable for all stakeholders.”

  • The market for ESG-focused exchange traded funds is controlled by a small group of institutional investors, which include a Finnish pension fund and the Bank of Italy.