US banks' climate change disclosures should be standardized over long run, Fed's Powell says

US banks’ disclosures about the impact of climate change on their finances should be required over time to be uniform, Federal Reserve Chairman Jerome Powell said.

“Financial institutions everywhere, particularly large and medium-sized, are working hard on this,” he told the Senate Banking Committee today. “But in the long run, we have to be going in the direction of more standardization.”

The comment seems to align Powell with Democratic Fed Governor Lael Brainard, who has been the leading advocate at the central bank for addressing global-warming risks.

Disclosures that are “standardized, reliable and mandatory” could improve access to business data needed by regulators to properly manage risks, she said this month.

Powell said a key question more immediately is whether disclosures should vary by jurisdiction and institution.

The Task Force on Climate-Related Financial Disclosures, headed by former New York City mayor Mike Bloomberg, is “struggling” with this question, he said.

“It’s appropriate to allow some of that difference to persist for now,” Powell said. “But in the long run, clearly we ought to be going to a kind of template or standardized.”

The private-sector task force is part of the Basel-based Financial Stability Board.