Treasury Secretary Janet Yellen said Sunday she will lead an effort across U.S. financial regulators to better scrutinize the potential of climate-change risk, part of President Joe Biden’s whole-of-government approach to what many view as a worsening crisis, and one with implications for borrowers, lenders and investors.

Yellen said in remarks to the Venice International Conference on Climate that the regulatory review, which will be done by the Financial Stability Oversight Council, will examine whether banks and other lending institutions are properly assessing the risks to financial stability. She chairs the committee that includes Treasury, the Federal Reserve, the Securities and Exchange Commission and other financial regulators. It was created in the wake of the financial crisis a decade-plus ago.

Yellen and her Group of 20 counterparts wrapped talks on Saturday in which finance leaders recognized carbon pricing as a potential tool to address climate change for the first time in an official capacity.

Read: G-20 finance ministers back deterring use of tax havens

Some, mostly Republican, lawmakers have criticized the Fed’s recent push into exploring climate-change policy. They argue that the topic remains too nuanced for near-term decisions and is beyond the scope of the dual Fed mandates for steering the economy toward full employment and controlling inflation.

San Francisco Fed President Mary Daly said in a recent speech that climate change is affecting both employment and prices, which lands the critical topic under the Fed’s policy purview. Fed Chairman Jerome Powell has said the topic remains a longer-range issue for the central bank, not a feature of monetary policy.

The critical lawmakers have also queried early efforts by the Fed to push banks on “stress testing” climate issues, pointing to longer-term measurement uncertainty and a poor fit for differently sized banks. They’ve also challenged the SEC’s pursuit of climate-risk disclosure from publicly-traded companies. The SEC just concluded its comment period on potential new rules.

Related: CEOs want SEC climate reporting separate from earnings but concede new rules are likely

Already, major pension funds, mutual funds and other money managers have shown increased interest in reshaping portfolios away from companies whose output is harshest on the environment. The U.S. lags its European counterparts in creating regulations around such moves.

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“The investment needed to green the global economy is enormous and far exceeds the scale of official finance. Private capital will need to fill most of that gap,” Yellen said Sunday.

“There are some positive trends in this regard. Investor demand for climate-aligned investments, including green bonds and sustainable assets, is rapidly increasing in certain markets,” she said. “I am also pleased to see momentum building in financial institutions around net-zero [emissions] commitments.”

Biden has committed to reduce U.S. emissions from 2005 levels by at least 50% by 2030.

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But, Yellen said, “the current financial reporting system is not producing reliable disclosures. We also need consistency of reporting frameworks over time, as well as comparability across firms and jurisdictions, providing the useful information that investors need to make informed decisions.”

Climate change brings risks from more frequent and severe natural disasters — so-called physical risks — that have, and will continue to become, more prominent, she stressed. Other risks will emerge for industries during the transition from fossil-fuel


reliance to greater use of renewable energy, she said.

Such impacts are already on the minds of investors. David Friedberg, the founder and chief executive of San Francisco investment firm the Production Board, last week laid out the investment implications of the worsening drought affecting North America.

Read: June was hottest on record in the U.S. as 40-year toll of major climate disasters reaches $2 trillion

Yellen said the Biden administration backs international efforts to send $100 billion per year from a variety of public and private sources to developing countries to combat climate change.

Yellen said she planned to hold a meeting of the heads of the international lending institutions to discuss ways to better align their efforts with the Paris climate agreement. Biden returned the U.S. to the nonbinding pact soon after taking office, reversing an executive order from the Trump administration to remove the nation from the agreement, citing in part noncompliance from China, India and others.

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