The costs of wildfires, storms, droughts and floods impact everything from insurance and mortgage markets to pension funds and other financial institutions. Those observations are not entirely new, but they carry new weight coming with the imprimatur of the regulator of complex financial instruments like futures, swaps and other derivatives that help fix the price of commodities like corn, oil and wheat. It is the first wide-ranging federal government study focused on the specific impacts of climate change on Wall Street.
“This is the first time a government entity has looked at the impacts of climate change on financial markets in the U.S.,” said Robert Litterman, the chairman of the panel that produced the report and a founding partner of Kepos Capital, an investment firm based in New York. “Rather than saying, ‘What’s the science?’ this is saying, ‘What’s the financial risk?’”