WASHINGTON (Reuters) – A top U.S. commodities regulator said on Wednesday climate change poses a major market risk and urged federal government action to address it, putting him at odds with the Trump administration which has often dismissed the issue.
Rostin Behnam, one of five commissioners of the Commodities Futures Trading Commission, made the comments at a public meeting focused on financial risks. He said he will form a special committee tasked with writing a report later this year examining the threats and proposing action.
“The impacts of climate change affect every aspect of the American economy – from production agriculture to commercial manufacturing and the financing of every step in each process,” Behnam said in his opening remarks at the meeting of the CFTC’s market risk advisory committee.
“As most of the world’s markets and market regulators are taking steps towards assessing and mitigating the current and potential threats of climate change, we in the U.S. must also demand action from all segments of the public and private sectors, including this agency,” Behnam said.
He cited a record $160 billion in global economic costs in 2018 from natural disasters and pointed out that the recent extreme weather across the U.S. Midwest had led to devastating floods and tornadoes, reducing crop yields, hitting commercial manufacturing, and making markets volatile.
“Our commodity markets and the financial markets that support them will suffer if we do not take action to mitigate the risk of contagion,” he said.
Behnam said climate change can affect users of derivatives markets ranging from insurers to commercial banks and farmers.
White House spokesman Judd Deere declined to comment.
The Trump administration has suppressed federal scientific research on climate change and other agency regulators have said it was not a priority.
Behnam, who was nominated as a commissioner by President Donald Trump in 2017, compared climate change to the 2008 financial crisis, which he said showed the interconnectedness of the global financial system.
“All risk analysis, including risk derived from climate change, must include a holistic examination of the systemic relationships throughout all of our financial markets,” he said.
Two Democrats on the Senate Banking Committee, Hawaii Senator Brian Schatz and Ohio Senator Sherrod Brown, applauded Behnam’s initiative, urging him to collaborate with heads of 36 central banks developing a joint climate risk assessment.
They said they want other U.S. banking and securities regulators to follow Behnam’s lead.
Reporting by Valerie Volcovici; Editing by Richard Chang