Federal Reserve Governor Lael Brainard said climate change is already imposing substantial economic costs while presenting risks and opportunities to financial institutions.

Brainard said financial institutions that do not implement frameworks to measure, monitor, and manage climate-related risks could face outsized losses on climate-sensitive assets due to environmental shifts or a disorderly transition to a low-carbon economy.

"Conversely, robust risk management, scenario analysis, and forward planning can help ensure financial institutions are resilient to climate-related risks and well-positioned to support the transition to a more sustainable economy," she said.