Summers: Push for Central Banks to Focus on ‘Remote’ Climate Risk Is Attempt to Pass Climate Legislation ‘Through the Back Door’

During an interview aired on Friday’s broadcast of Bloomberg’s “Wall Street Week,” Harvard Professor, economist, Director of the National Economic Council under President Barack Obama, and Treasury Secretary under President Bill Clinton Larry Summers stated that even though there’s a movement for central banks “to start focusing on what they call climate risks, as if those were central, systemic financial risks” such systemic financial risks are “quite remote” and much of the enthusiasm is “from people who couldn’t legislate things about climate through the front door and so they want to try to legislate them through the back door, through central bank regulatory policies.”

Summers stated, “I think that people should make investments largely on the basis of what the ultimate prospects are. I think the problem comes when people who really have an environmental motivation try to attach an economic motivation and make economic arguments that aren’t really very strong. I think there’s been a whole movement in the central banking community to start focusing on what they call climate risks, as if those were central, systemic financial risks. And I don’t think the evidence has ever been produced that genuine concern about systemic financial risk of the kind we had in 2008 during the crisis, of the kind that reared its head in the immediate aftermath of COVID, that that is something that is likely to come from climate issues. It seems to me to be a quite remote risk.”

He continued, “And I think a lot of the enthusiasm came from people who couldn’t legislate things about climate through the front door and so they want to try to legislate them through the back door, through central bank regulatory policies. And I’m not really very enthusiastic about all of that.”

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