Among the many challenges facing financial institutions in 2020 was COVID-19's influence on the world's economy and monetary systems and the challenge of planning and solving known and unknown risks. Amid this global pandemic, regulators and policymakers have been tasked with simultaneously solving current threats and trying to be proactive in protecting financial systems from concurrent or future threats. Climate change has come to the forefront of this conversation, with European regulators remaining steadfast in their path toward stricter climate risk mitigation requirements and U.S. regulators under a Biden Administration planning to take new steps toward a more hands-on approach. This was recently highlighted in the U.S. Senate confirmation hearing for Treasury Secretary nominee Janet Yellen. Yellen stated climate change was an existential threat, and she would establish a hub to study tax policy and financial system risk from climate change.
For years now, countries in Europe have been leading the way to assess the risks of climate change for financial institutions and economies and create standards and practices to hold the financial industry accountable. But, just like a pandemic, climate change does not adhere to international boundaries, and it is becoming increasingly clear that U.S. and global regulators need to work together to find solutions. At a virtual panel discussion hosted by the Center for American Progress (CAP) on December 18, 2020, New York Department of Financial Services (NYDFS) Superintendent Linda Lacewell said a meeting with European regulators gave the NYDFS "the confidence to move forward" with action on climate change. She added, "We all need to act. Otherwise, we will have tremendous gaps."