Wall Street Says Basel 3 'Endgame' Will Upend Climate Finance - Bloomberg
Wall Street Says Basel 3 ‘Endgame’ Will Hurt Climate Finance - Bloomberg
Wall Street Says Basel 3 ‘Endgame’ Will Upend Climate Finance
- Wall Street sees new capital rules challenging green financing
- Warning comes amid fossil-fuel transition deal at COP28 summit
Wall Street’s biggest banks are warning that existing assumptions around much-needed green finance will no longer hold if the US goes ahead with stricter capital requirements.
The Basel 3 Endgame, as the planned rules have been dubbed, marks the final implementation stage in the US of regulations created after the financial crisis of 2008. Banks will need to set aside more capital, which will make it costlier for them to provide finance. Proposed in July by a group of US authorities that includes the Federal Reserve, the rules will “ fundamentally alter” how banks in the world’s biggest economy approach risk, EY says.
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Wall Street Says Basel 3 ‘Endgame’ Will Upend Climate Finance
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”