Agency Actions Will Better Protect Workers’ Hard-Earned Savings, Create Good Jobs, and Position America to Lead the Global Economy
Washington, D.C. – Today, Thursday, May 20th, 2021, President Joe Biden took action to address the serious threat that the climate crisis poses to our economy. Extreme weather-related to climate change can disrupt entire supply chains and deprive communities of food, water, or emergency supplies.
Snowstorms can offline entire power grids. Floods made worse by rising sea levels destroy homes and businesses.
As the United States builds a modern and equitable clean energy future that creates millions of good-paying jobs and advances environmental justice, the agency actions spurred by the President’s directive today will help safeguard the financial security of America’s families, businesses, and workers from the climate-related financial risks they are already facing.
The President’s Executive Order on Climate-Related Financial Ris will help the American people better understand how climate change can impact their financial security. It will strengthen the U.S. financial system. And it will inform concrete decisions that the federal government can take to mitigate the risks of climate change.
From signing a loan for a new home or small business to managing life savings or a retirement fund—it is important for the American people to have access to the information needed to understand the potential risks associated with these significant financial decisions. We know that the climate crisis, whether through rising seas or extreme weather, already presents increasing risks to infrastructure, investments, and businesses. Yet, these risks are often hidden.
With so much at stake, this Executive Order ensures that the right rules are in place to properly analyze and mitigate these risks. That includes disclosing these risks to the public and empowering the American people to make informed financial decisions.
The Executive Order will also ensure that the federal government takes concrete steps to mitigate these risks itself. Together, these steps will protect workers’ life savings, spur the creation of good-paying jobs, and help position the United States to lead the global economy.
Specifically, the Executive Order on Climate-Related Financial Risk will:
Develop a Whole-of-Government Approach to Mitigating Climate-Related Financial Risk
The Executive Order requires the National Climate Advisor and the Director of the National Economic Council to develop, within 120 days, a comprehensive government-wide climate-risk strategy to identify and disclose climate-related financial risk to government programs, assets, and liabilities.
This strategy will identify the public and private financing needed to reach economy-wide net-zero emissions by 2050 – while advancing economic opportunity, worker empowerment, and environmental mitigation, especially in disadvantaged communities and communities of color.
Encourage Financial Regulators to Assess Climate-Related Financial Risk
The Executive Order encourages the Treasury Secretary, in her role as the chair of the Financial Stability Oversight Council, to work with Council members to assess climate-related financial risk to the stability of the federal government and the stability of the U.S. financial system.
Additionally, in her role as the chair, she should work with member agencies to consider issuing a report, within 180 days, on actions the Council recommends to reduce risks to financial stability, including plans that member agencies are taking to improve climate-related disclosures and other sources of data, and to incorporate climate-related financial risk into regulatory and supervisory practices.
Bolster the Resilience of Life Savings and Pensions
The Executive Order directs the Labor Secretary to consider suspending, revising or rescinding any rules from the prior administration that would have barred investment firms from considering environmental, social, and governance factors, including climate-related risks, in their investment decisions related to workers’ pensions.
The order also asks the Department to report on other measures that can be implemented to protect the life savings and pensions of U.S. workers and families from climate-related financial risk and to assess how the Federal Retirement Thrift Investment Board has taken environmental, social, and governance factors, including climate-related risk, into account.
Modernize Federal Lending, Underwriting, and Procurement
The Executive Order directs the development of recommendations for improving how Federal financial management and reporting can incorporate climate-related financial risk, especially as that risk relates to federal lending programs. It also requires consideration of new requirements for major federal suppliers to disclose greenhouse gas emissions and climate-related financial risks and to ensure that major federal agency procurements minimize those risks.
Reduce the Risk of Climate Change to the Federal Budget
The Executive Order ensures that the federal government is taking steps to be fiscally responsible in response to the significant risk that unmitigated climate change poses to the federal budget through increased costs and lost revenue.
The Executive Order directs that the federal government develop and publish annually an assessment of its climate-related fiscal risk exposure. It also directs the Office of Management and Budget to reduce the federal government’s exposure through the formulation of the President’s Budget and oversight of budget execution.