International Journal of Business, Management and Commerce (IJBMC)

The US Security and Exchange Commission (SEC) is working on bringing material risk from climate change into its risk reporting protocols. They are collaboration existing international efforts to do the same with the goal of promoting global economic efficiency in a changing climate. Without this international coordination, US companies will not compete well for investable funds against foreign companies who will be reporting their material financial risk and macroeconomic financial stability within clear and mutually consistent protocols. The Federal Reserve Board (FED) is meanwhile engaged in a complementary and parallel effort. They are expanding their acknowledgement of significant and material climate risk in collaboration with the central banks of the European Union and the G-20 countries. All of these countries have been working meticulously together to repurpose regulatory instruments like stress tests, risk-based capitalization standards, and integrated reporting protocols within existing and well-established mandates. These approaches can build a durable climate reporting infrastructure because both the FED and the SEC have been excused by design from direct interference from either of the politicized branches of government. The courts can rule on perceived overreaches in design, but they cannot interfere with the implementation of expansions to accepted rules once that hurdle has been crossed; and it would not “cost an arm and a leg”.