Nations attending the recent G20 summit in Hamburg, Germany, reaffirmed the principles of the Paris Agreement, committing to a new “climate and energy action plan.” A communiqué from the summit declared the Paris accord “irreversible.” On the surface, the new commitments were encouraging. But, of course, glaringly absent from the joint plan is the world’s largest economy: the United States.
President Trump’s decision to pull out of the Paris Agreement complicates existing challenges and poses new ones in the worldwide fight against climate change. For banks and other financial institutions, the reality of climate change — magnified by the U.S. reversal — is a risk management curveball, throwing a wrinkle in financial institutions’ plans to manage everything from physical risk, to asset valuation, to the creditworthiness of both high-carbon and carbon-mitigating industries.
Trump’s decision was not only criticized by several political leaders around the globe, but financial leaders as well. Goldman Sachs CEO Lloyd Blankfein said, in his first tweet ever, “Today’s decision is a setback for the environment and for the U.S.’s leadership position in the world.” JPMorgan Chase CEO Jamie Dimon said, “I absolutely disagree with the Administration on this issue.”continue reading »