With the recent departure of the long-serving head of the Bureau of Labor Statistics and President Trump’s subsequent appointment of a partisan economist this week, I’ve been reflecting on the critical role of dependable, widely accepted data in financial decision-making. Each month, the BLS provides statistics on employment, inflation, and productivity that investors, CEOs, and central bankers have historically regarded as authoritative. The reliability and consistent issuance of these reports equip markets with a common understanding, allowing for real-time reactions.
Within climate discussions, it is widely accepted that certain climate-related risks are not fully accounted for in financial markets. The impending expenses associated with severe weather events, disruptions to supply chains, and declines in labor output are apparent, supported by extensive academic studies. However, there is no climate equivalent to the BLS; no standardized, authoritative measure exists that would enable markets to assess such risks with comparable speed or certainty.
This presents a significant challenge, making it more difficult to alert markets and the businesses operating within them to the urgent need for climate action. This issue is unlikely to improve as the U.S. federal government consistently questions climate science, either concealing or obscuring existing climate data.
Fragmented data
To comprehend the data gap, it is important to note that the federal government has, of course, historically generated a wide array of vital climate data. The National Oceanic and Atmospheric Administration (NOAA) tracks atmospheric greenhouse gases, sea levels, and ocean heat—although the agency faces budget reductions and has been compelled to discontinue some climate efforts. Historically, the congressionally mandated National Climate Assessment has synthesized the latest scientific information on how climate change impacts the United States, from regional heat waves to crop yields. Its work has been slowed this year.
Private sector endeavors have also sought to address this data void. For instance, the Task Force on Climate-related Financial Disclosures established a voluntary reporting structure for climate risks, and an expanding sector of climate-risk modeling companies converts scientific forecasts into asset-specific risk evaluations.
While the presence of this data is beneficial, corporate sustainability professionals frequently express concerns in discussions regarding the inconsistent standards and absence of uniformity. A significant portion of this analysis focuses on extended timeframes and is restricted by paywalls. Large, advanced companies possess the capacity to assess and utilize this information, but widespread access remains limited. Furthermore, even within these larger organizations, senior decision-makers frequently lack proficiency in the terminology of climate risk. Consequently, the fragmented character of this data inherently leads to market inefficiencies.
Anticipating or even desiring an immediate resolution to these issues is, admittedly, unrealistic. As the expenses associated with climate change accumulate, these concerns will eventually demand attention. Until that time, risk will persist in being inaccurately valued.
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