What is Climate Related Financial Risk, and How Does This Affect Agriculture
The Biden Administration recently released an incredibly concerning statement regarding its agenda to save the planet from the impending doom of climate change. The plan is to implement initiatives focused on reducing climate related financial risk. As clarified by the Bank for International Settlements, climate related financial risks refer to the set of potential risks that may result from climate change and that could potentially impact the safety and soundness of individual financial institutions and have broader financial stability implications for the banking system.
There are a couple important take-aways. First, the U.S. Government, its buying power, and its regulatory authority have a tremendous impact on nearly everything. A minor shift in policy can wipe out entire industries worldwide. As KCA President, Riley Robbins, mentioned in his article, the USDA recently funded research for cell-cultured meat. If the banking systems determine lab-grown food is positive and production agriculture is negative, the credit system that funds agriculture production will dry up and the U.S. agriculture industry would collapse faster than President Biden’s approval rating.
The Biden Administration’s goal is that the U.S. Government lead the way by adjusting its investment and procurement strategies to reflect a more “green” and less financially risked approach. They plan to build a framework for application in the private sector as well as the modification of numerous regulatory agencies. The fact sheet states, “It would also make clear that retirement managers can take important environmental, social, and governance factors into account when making investment decisions, so that workers can share in the gains that come from sustainable investments.” Apparently they believe they can give Wall Street both a heart and a moral compass.
Ultimately, the framework is based on “potential risks that may result…and could impact”. “Potential”, “may”, and “could” are speculative words used to define actionable steps toward saving the planet, while tying it all to money, investments, and greed. A real-world example of this speculative hypocrisy putting more investment at risk than any amount of carbon is Tesla, an electric car company with annual revenues of $31 billion and a market capitalization of $1 Trillion on a net margin of 2.2% and competition growing in the field of Electric Vehicles.
When you walk in to apply for that operating note and are declined based on climate related financial risk but can finance a $100,000 electric vehicle, you’ll know then that we have saved the planet. When you bite into a juicy lab-grown T-bone mush steak, you’ll know we’ve saved the planet. When we run out of power and freeze like cave men in modern and energy efficient homes, we will all be so proud and know we have finally saved the planet.