Biden Orders Federal Financial Strategy Against Climate Risks, With Implications For Homeowners, Pensions And Government Contracts
President Joe Biden has mandated a federal government strategy to quantify climate change risks to public and private financial assets.
Banking, housing and agriculture regulators are among those who will be asked to use climate risk in their oversight of large industries, including lending federal funds and decisions on federal contracts. Some retirement plans regulated by the Ministry of Labor, including pensions, will also be affected by the new requirement.
The decree signed Thursday will direct Treasury Secretary Janet Yellen, as head of the Financial Stability Supervisory Board, to share data on climate-related financial risks and publish a report. The FSOC, which was created after the financial crisis more than a decade ago, includes the Federal Reserve and the Securities and Exchange Commission.
“From signing a loan for a new home or small business to managing life savings or a retirement fund, it’s important that Americans have access to the information they need to understand the potential risks associated with it. to these important financial decisions ”. the White House in its statement. “We know that the climate crisis, whether due to rising seas or extreme weather conditions, already poses growing risks to infrastructure, investments and businesses. Yet these risks are often hidden. “
The OE advocates the creation of a government-wide approach by National Economic Council Director Brian Deese and National Climate Advisor Gina McCarthy in coordination with Yellen and the Office of Management and Budget.
As part of Biden’s approach, the OMB director, while bringing in other agencies, would identify the main drivers of federal exposure to climate risk and attempt to quantify climate risk for budget projections. long term of the president. The OMB and the Council of Economic Advisers would also develop and publish an assessment of the government’s exposure to climate risks.
Included in the ordinance, the Department of Labor, which regulates pension funds, will be asked to revise or rescind Trump-era rules limiting the ability of pension fund managers to vote on environmental, social, and security proposals. governance (ESG) of shareholders at annual meetings; these proposals increasingly include the disclosure of the risks associated with climate change.
And federal suppliers could be required to publicly disclose their greenhouse gas emissions and climate risks, and set science-based targets to reduce them.
The action of a climate-focused Biden was expected. Preliminary reports revealing much of its content circulated last month as the president and his climate envoy John Kerry hosted world leaders for a summit.
Lily: White House Biden reinstates official who heads top-level climate report
Republicans are generally concerned that tightening regulatory requirements and dropping support for traditional energy sectors could be costly for businesses and households.
The activist group Stop the Money Pipeline Coalition, made up of more than 150 separate organizations and focused on revealing the amount of big bank funding in fossil fuels, welcomed the OE as “a milestone for the movement to climate finance ”, but stressed that he wanted formal action. United States plan for the next major United Nations climate meeting in Glasgow in November.
Lily: Big banks, including JPMorgan and Citi, have invested $ 3.8 trillion in fossil fuels since the Paris Agreement
Don’t miss: Stop new investments in oil and gas, says energy watchdog in firmer stance on emissions
Biden has approached climate change through executive orders and by wrapping the issue in broader policy initiatives, including his $ 2. $ 3 trillion infrastructure plan, as it realigns the United States with a global push to lower Earth’s rising temperature. He said the United States could, through increased actions, achieve net zero emissions across the economy by 2050.
Independent regulators, such as the SEC and the Federal Reserve, do not take direct orders from the White House and would make their own decisions on the new rules. But the downward push to tackle climate change is clear.
The Fed has increasingly flagged climate change as a long-term concern for financial stability. The SEC, meanwhile, is currently in a comment period for its efforts to demand further disclosures from companies on climate change and other ESG issues in the coming months.
“The problem with executive orders is that they can be canceled very easily by someone who comes next. [Biden] has taken some very important steps, especially in terms of signaling – like the return to the Paris Agreement, like the revocation of the Keystone pipeline, and also the publication of a decree that is really aimed at tackling the climate crisis, this that requires whole-of-government government, ”said Sanjay Patnaik, director of the Center on Regulation and Markets at Brookings, in a commentary at the Biden climate summit in April.
“I think that’s where he’s had an impact so far, because he’s really trying to reorient all federal agencies and parts of government towards climate as a major issue to be addressed,” Patnaik said.
Lily: Biden says US can’t let China win EV race as he visits Ford factory