February 17, 2021 /3BL Media/ - The sustainability nonprofit Ceres issued formal comments to the Federal Reserve Board of Governors today, urging the agency to strengthen and modernize the Community Reinvestment Act (CRA) by incorporating considerations of climate resilience and racial justice.
“Racial justice and environmental justice go hand-in-hand, and we won’t achieve one without the other,” said Steven Rothstein, Managing Director of the Ceres Accelerator for Sustainable Capital Markets at Ceres. “The Federal Reserve has the opportunity and the obligation to increase climate resilience in communities of color -- and to right some of the historic wrongs created by environmental racism and redlining. Improving the CRA would be a positive step forward.”
The Federal Reserve Board of Governors enacted the Community Reinvestment Act in 1977 to combat redlining – the practice of systematically denying mortgage and other financial services to communities of color. However, the act does not explicitly mention race, and includes no considerations of environmental racism and its economic and health implications. The comments from Ceres urge the agency to explicitly consider racial justice and climate resilience in an integrated manner as part of the CRA, and that it:
- Boost climate resilience in low- and moderate-income communities of color.
- Include race and climate vulnerability in CRA exams
- incentivize climate resilience activities in vulnerable communities
- Use impact scores to assess climate change resilience in the CRA process
- Collect improved community development and deposit data
- Recruit experts in climate change resiliency that reflect the diversity of the communities that the CRA seeks to serve
To learn more about these recommendations and others, read the formal comments here.
A recent Brookings study found that the net worth of the average white family in the U.S. is nearly 10 times greater than that of the average Black family. These inequities have meant that climate change impacts fall harder on communities of color. Numerous studies have found that high polluting power plants and refineries are more often sited closer to Black communities than white communities, in part because of historic redlining practices. One study found that geographic zones that are more vulnerable to extreme heat have also experienced systematic disinvestment driven by racial bias through redlining practices.
In 2020, the Ceres Accelerator for Sustainable Capital Markets issued Addressing Climate as a Systemic Risk: A call to action for U.S. financial regulators, which highlighted the importance of the CRA process in driving solutions that can enhance financial access, economic prosperity and broader climate and economic resilience for low- and moderate-income communities of color and other vulnerable communities.
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. The Ceres Accelerator for Sustainable Capital Markets is a center within Ceres that aims to transform the practices and policies that govern capital markets in order to reduce the worst financial impacts of the climate crisis. It spurs capital market influencers to act on climate change as a systemic financial risk—driving the large-scale behavior and systems change needed to achieve a just and sustainable future, and a net-zero emissions economy. For more information, visit ceres.org and follow @CeresNews.
KEYWORDS: Federal Reserve, Federal Reserve Chairwoman Janet Yellen, climate justice, Racial Justice, capital markets, CERES