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Climate change poses risks to financial system, US bank CEOs tell Congress


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Climate change poses risks to financial system, US bank CEOs tell Congress

The CEOs of some of the largest banks in the U.S. told lawmakers April 10 that climate change poses risks to the financial system.

Their comments came at a hearing in the House Financial Services Committee, where Rep. Rashida Tlaib, D-Mich., asked the U.S. bank leaders if they agreed with that statement.

"If we don't have a planet, we're not going to have a very good financial system," Morgan Stanley Chairman and CEO James Gorman responded.

Gorman was one of the CEOs present at the hearing, which partly focused on a variety of social issues and marked the first time since the financial crisis that the leaders of major U.S. banks testified together.

The heads of Bank of America Corp., Citigroup Inc., Bank of New York Mellon Corp., Goldman Sachs Group Inc., State Street Corp. all said they agreed with that statement.

JPMorgan Chase & Co. Chairman and CEO Jamie Dimon said climate change does not pose direct risks to the financial system but that "climate change is real and we should be taking action immediately to do something about it."

Tlaib pointed to a recent paper from a top official at the Federal Reserve Bank of San Francisco, which argued that the effects of a changing climate over the coming decades could cause broader shocks to the U.S. economy and affect the Fed's ability to meet its monetary policy goals.

The congresswoman also highlighted a finding from the Banking on Climate Change 2019 report, which found that global bank funding for fossil fuel projects has increased since the signing of the 2015 Paris agreement on climate change. JPMorgan Chase was at the top of the list of fossil fuel financing, followed by Wells Fargo & Co., Citigroup and Bank of America. Wells Fargo, whose former CEO testified at the committee last month, did not attend the hearing.

The bank CEOs told Tlaib that they are working with fossil fuel companies on transitioning to cleaner energy sources, but Tlaib said their words are "not consistent with your actions."

"You are green-washing your own track record and duping the American people into believing that you are helping address climate change," she said.

Dimon, meanwhile, said his company has committed to switching to 100% renewable sources for its global energy needs by 2020 and helping fund $200 billion in clean financing projects through 2025. While it is working with fossil fuel companies to transition away from those sources, the U.S. will in the meantime still "need energy to eat, drive, get here, heat, ventilate hospitals," he said.

He also called on Congress to take action by passing measures like a carbon tax.

"If you want to fix this problem, you are going to have to do something," Dimon said.