Yellen, Lagarde Call On Private Sector to Mobilize on Climate

(Bloomberg) -- U.S. Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde wrapped up a week of international events focused on fighting climate change by renewing their call to financial institutions and investors to mobilize private capital in the effort.

“We obviously need a massive amount of private investment to green the global economy,” Yellen said Friday during a virtual panel session on climate change and capital markets organized by Bloomberg LP.

Yellen also repeated her pledge that the Treasury and other regulatory bodies will help private institutions identify climate-related risks and opportunities by taking steps to improve financial reporting and increasing the reliability of climate-related disclosures.

“There’s a shortage of the type of information that private investors need to calculate returns,” she said. “Governments need to make sure the information that’s needed is available.”

Yellen said she intends to use the Financial Stability Oversight Council, a cross-agency body of regulators that she chairs, toward that end.

Lagarde applauded an initiative announced by the European Commission earlier this week involving a first set of criteria for green investment. The classification system will allow producers of rechargeable batteries, energy efficiency equipment, low-emission cars and wind and solar power plants to earn a formal green label.

There are risks, however, with leading the way on such initiatives, Lagarde noted.

Common Baseline

“I have this fear that -- as we have done it in the past with accounting requirements, particularly in the financial sector -- we run the risk of trying to do better than the others and we miss a chance to have a common baseline that would be working across the board for all corporates,” she said.

The event came as U.S. President Joe Biden convened a virtual summit of global leaders to discuss climate change. The summit signaled his intent to put the U.S. back into a principal role in the international push to limit carbon emissions and arrest global warming. Biden opened the event Thursday by promising to cut U.S. greenhouse gas emissions by at least 50% below the 2005 levels by 2030.

In a separate panel, ECB Governing Council member Klaas Knot, who’s also vice chair of the Financial Stability Board, said that it’s good to have the U.S. “back in the global tent” on climate-change issues.

The panel with Lagarde and Yellen also featured Mairead McGuinness, the European commissioner for financial services. It was moderated by Mark Carney, the UN Special Envoy on Climate Action and Finance and former head of the U.K. and Canadian central banks.

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