Image: Gage Skidmore via Wikimedia Commons

By Amy Lupica, ODP Daily Editor

In May, President Biden ordered government agencies to evaluate and develop a plan to mitigate the risk that climate change presents to the US economy. Last week, the administration released a first-of-its-kind roadmap to building a climate-resilient economy. The 40-page report was announced Friday and lays out concrete government-wide steps to protecting financial, insurance, and housing markets — as well as individual savings for Americans. 

Why This Matters: Climate change isn’t just destructive; it’s expensive. Climate disasters like hurricanes and wildfires cost the nation tens of billions of dollars every year. And residents caught in the path of catastrophe can be left struggling to access recovery aid, pay insurance premiums, or rebuild their homes. Additionally, climate change can increase serious health risks like COVID-19, and other respiratory and cardiac problems, which can be expensive to treat. As explained by Gina McCarthy, the White House National Climate Adviser, “If this year has shown us anything, it’s that climate change poses an ongoing urgent and systemic risk to our economy and to the lives and livelihoods of everyday Americans, and we must act now.”

What’s in Your Wallet?

“The intensifying impacts of climate change present physical risk to assets, publicly traded securities, private investments, and companies,” said Biden in the report, continuing:

The failure of financial institutions to appropriately and adequately account for and measure these physical and transition risks threatens the competitiveness of US companies and markets, the life savings and pensions of US workers and families, and the ability of US financial institutions to serve communities. 

The new roadmap builds climate change considerations into decision-making across the government. It will address climate risks to the mortgage process, stock market disclosures, employee benefits, retirement plans, federal procurement, government budgeting, and building standards. 

Already, government agencies are taking action. On Wednesday, the labor department proposed a rule that financial managers must consider environmental factors in decisions regarding pensions and retirement savings. The Office of Management and Budget will ask other government agencies to consider carbon emissions when doing business with vendors and suppliers. Even FEMA is updating standards for the National Flood Insurance Program, revising guidelines in place since the 1970s. Additionally, the President’s budget proposal for fiscal 2023 will also consider climate impacts.

But at the end of the day, McCarthy affirms that these programs will help protect people on the front lines of the US economy. “This roadmap isn’t just about protecting our financial system –it’s about protecting people, their paychecks, and their prosperity.”