Hi and welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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Crypto’s climate implications
The crypto world had an eventful week, starting with the SEC’s Gary Gensler declaring it time for crypto firms to register with the agency – making it clear that he believes the vast majority of crypto tokens are securities. At the Fed, new banking chief Michael Barr outlined an agenda that will make crypto and climate change top priorities, and Fed Chair Jerome Powell called for the sector to be appropriately regulated. The White House also chimed in, warning in a new report that US crypto mining operations, which now consume as much energy as all home computers or all residential lighting, could hinder the nation’s ability to mitigate climate chaos.
This all comes as Ethereum – the blockchain that underpins the world’s second-largest cryptocurrency – nears the end phase of its merge from a proof of work to proof of stake model that will lessen the amount of energy needed to create new tokens and process transactions — by roughly 99%. Despite this upgrade nearly eliminating Ethereum's carbon footprint, ESG investors aren’t all sold on it.
Also, a Senate committee will have a hearing on a bill this week that would declare bitcoin and ether as commodities under the oversight of the CFTC.
Do as I say, not as I do
While Texas was banning its pension funds from doing business with BlackRock over perceived bias toward fossil fuels – a charge the money manager strongly denied – a new Texas Monthly piece revealed that the lieutenant governor still held potentially hundreds of thousands of dollars in both BlackRock shares and mutual funds. Both Texas and Florida have banned state pension funds from considering ESG in their investment decisions, but new research from Morningstar shows that these pension managers supported ESG proposals at the company level 99% of the time. Whoops.
Fed gets serious on climate… next year
Can we wait another year to address growing and known climate financial risks after another summer of destructive extreme weather, drought, fires, and record setting heat? Apparently yes. Although the Fed is arguably a long way behind its central banking counterparts, it plans to begin dipping its toes in the water by launching a pilot program to study climate risk beginning in 2023. Let’s hope U.S. regulators can catch up before it’s too late.
On our radar
WWF and over 90 other organizations have called on central banks around the world to step up action on climate, asking for better recognition for biodiversity loss and ecosystem degradation as environmental risks.
The Twitter thread of the week comes from Alex Martin at Americans for Financial Reform, who summarized an entire conference on “Climate Implications for Financial Stability” hosted by the Treasury and Office of Financial Research and added links to lots of new research. It’ll feel like you were there!
Sep 15: Senate Banking, Housing, and Urban Affairs oversight hearing of the U.S. Securities and Exchange Commission with the Honorable Gary Gensler at 10 AM. Tune in to watch here.
Sep 15: House Committee on Oversight and Reform hearing on “examining Big Oil’s prices, profits, and pledges” (alliterations for titles? Groundbreaking)
Green Banking at Scale: Reps from four state green banks join Sen. Markey and Rep. Dingell for a talk on implementing the $27 billion in new IRA funding. Part of Climate Week. Register here.
