With record-shattering heat levels and swaths of raging wildfires across various states, climate change has demanded the world’s attention as it is considered to be one of the most pressing issues of the decade.

Touching on the economic aspect behind decarbonization, Sarah Raskin, former member of the Federal Reserve Board of Governors and former deputy secretary of the U.S. Treasury, spoke at a virtual Berkeley Forum event Monday. According to Raskin, financial regulators, which are agencies that regulate financial markets and companies, play a critical role in safely guiding the current carbon-based economy into a more sustainable one.

“Unabated, climate change may continue to move faster than the ability of the private sector and the ability of local, state and federal government entities to deal with it,” Raskin said during the event.

While financial regulators are not often associated with combating climate change, their management of major economical aspects, such as financial firms, have a significant impact, according to Raskin. For instance, firms investing in high-carbon emitting sectors can worsen the climate crisis, which can eventually end up harming the firms.

Raskin compared the decarbonization effort to a boat hovering between two currents — the current carbon-based economy and the future sustainable economy — and the financial regulators as the “rudder” trying to maneuver the boat safely toward a sustainable economy.

“This is the treacherous passage we are navigating — trying to neither stay too long in the carbon-based system nor to veer too quickly into resilient systems that have yet to be scaled to provide for the world’s demand,” Raskin said during the event. “We need (financial regulators) to transition to a net-zero economy in the most stable, least dangerous way possible.”

Noting the role that financial regulators, such as the Federal Reserve System and federal housing finance agencies, play in slowing the pace of climate change while also carefully increasing the transition to a more sustainable economy, Raskin said financial regulators have “substantial power” to mitigate the climate crisis.

However, Raskin added that given the urgency of the crisis, action must be taken quickly and effectively. Such action is especially important as economies rebound from the COVID-19 pandemic, possibly resulting in the increase of greenhouse gas emissions.

“We have begun to move toward an economy and society that’s better for us, that provides durable benefits in terms of human health, economic well-being and inclusive prosperity for all our households, businesses and innovators,” Raskin said during the event. “To capture these benefits requires a maneuvering that is not easy but is within the power to imagine.”

Reflecting on her involvement with helping the United States navigate previous financial crises, Raskin noted her understanding of how crises can impact people’s lives.

Additionally, Raskin said her experience left her passionate about mitigating the inequitable effects of financial crises and helped shape her understanding of what needs to be done about climate change.

“If we stay clear-eyed, we will reap the benefits of an economy that is durable, sustainable and prosperous in the fullest sense,” Raskin said during the event. “This is where we have to go, and we need to bring all we bear to make it happen.”