portner, d. roberts, j. skea, p. r. shukla, a. pirani, w. moufouma - okia, c. pean, r. pidcock, s. connors, j. b. r. matthews, y. chen, x. zhou, m. i. gomis, e. lonnoy, t. maycock, m. tignor, t. waterfield ( eds. ), 2018, https : / / www. ipcc. ch / 2018 / 10 / 08 / summary - for - policymakers - of - ipcc - special - report - on - global - warming - of1 - 5c - approved - by - governments / ; on the impacts of global warming of 1. 5°c above pre - industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty. - 2making progress on climate change the economic consequences of climate change are already in evidence. there is growing evidence that extreme weather events related to climate change are on the rise — droughts, wildfires, hurricanes, and heat waves are all becoming more common. 4 natural disasters are a major source of losses to households and businesses ; one study finds that natural disasters have resulted in more than $ 5. 2 trillion in losses globally since 1980, more than 70 percent of which was not insured. 5 extreme weather events have been shown to disrupt corporate supply chains and impact corporate profitability. 6 chronic flooding and sea level rise negatively impact property values. 7 these events are expected to increase in frequency and severity over time, which could impact borrower creditworthiness or collateral values. with climate - related risks on the rise, governments, regulators, corporations, and investors are mobilizing to accelerate the transition to a greener economy, including through ambitious targets for reducing greenhouse gas emissions. unanticipated or abrupt shifts in policy, technology, or investor sentiment have the potential to produce abrupt repricing events that could result in losses on financial institution balance sheets. see world meteorological organization ( wmo ) task team, global warming and hurricanes : an overview of current research results ( princeton : geophysical fluid dynamics laboratory, 2020 ), https : / / www. gfdl. noaa. gov / global - warming - and - hurricanes / ; and the intergovernmental

for release on delivery 8 : 00 a. m. est february 18, 2021 the role of financial institutions in tackling the challenges of climate change remarks by lael brainard member board of governors of the federal reserve system at the “ 2021 iif u. s. climate finance summit : financing a pro growth pro markets transition to a sustainable, low - carbon economy ” hosted by the institute of international finance washington, d. c. february 18, 2021 i want to thank the institute of international finance for inviting me to join this discussion. let me start by noting that these are my own views and do not necessarily reflect those of the federal reserve board or the federal open market committee. 1 climate change is already imposing substantial economic costs and is projected to have a profound effect on the economy at home and abroad. 2 future financial and economic impacts will depend on the frequency and severity of climate - related events and on the nature and the speed at which countries around the world transition to a greener economy. 3 climate change and the transition to a low - carbon economy create both risks and opportunities for the financial sector. financial institutions that do not put in place frameworks to measure, monitor, and manage climate - related risks could face outsized losses on climate - sensitive assets caused by environmental shifts, by a disorderly transition to a low - carbon economy, or by a combination of both. conversely, robust risk management, scenario analysis, and forward planning can help ensure financial institutions are resilient to climate - related risks and well - positioned to support the transition to a more sustainable economy. i am grateful to morgan lewis and kevin stiroh of the federal reserve for their assistance in preparing this text. u. s. global change research program, impacts, risks, and adaptation in the united states : fourth national climate assessment, volume ii, d. r. reidmiller, c. w. avery, d. r. easterling, k. e. kunkel, k. l. m. lewis, t. k. maycock, and b. c. stewart ( eds. ) ( washington : usgcrp, 2018 ), https : / / nca2018. globalchange. gov /. intergovernmental panel on climate change ( ipcc ), “ summary for policymakers ” in : global warming of 1. 5°c : an ipcc special report, v. masson - delmotte, p. zhai, h. o.