Please invest in Our Daily Planet today, by making a one time or monthly contribution.
We do not charge our readers a subscription fee for our content. We want to continue to grow our readership, particularly among millennials and public servants. Voluntary contributions from readers will help us employ interns and freelance journalists, expand our content, and reach a larger audience.
Yesterday, President Biden signed an executive order on climate-related financial risk, a cross-governmental plan that directs federal agencies to identify and mitigate financial risks presented by climate change to Americans, businesses, and the government itself. The administration said that Americans are already facing risks due to worsening extreme weather events and other climate threats and they deserve to understand how these risks affect their financial security.
Why This Matters: Climate change costs the federal government billions every year. First, it’s crucial that the federal government understands its own climate risk, which is the major prescription given by the executive order. Second, the immense purchasing power of the government should be used to buy from suppliers who have a lower social cost of greenhouse gas emissions to encourage the private sector to slash its emissions.
What’s also important about this EO, as national climate adviser Gina McCarthy said on a press call, is that some form of mandatory risk disclosure from companies is already underway–which will be a crucial part of a stable economy in the climate change era.
Knowing The Risk: The Biden administration said that the plan aims to inform the American people about climate-related risks to their financial security, strengthen the U.S. financial system, and inform concrete decisions on how to best mitigate climate risks.
Requiring the National Climate Advisor, Gina McCarthy, and the National Economic Council Director to develop a comprehensive, government-wide climate-risk strategy within 120 days to identify and disclose financial risk to government programs, assets, and liabilities.
Encouraging the Treasury Secretary, Janet Yellen, to work with the Financial Stability Oversight Council to assess risk to the federal government and U.S. financial system’s stability and consider issuing risk-reduction recommendations within 180 days.
Directing the Labor Secretary, Marty Walsh, 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 in decisions related to workers’ pensions. It also asks the DOL to report on potential measures to protect the life savings and pensions of U.S. workers and families from climate-related financial risk.
Developing recommendations for improving how Federal financial management and reporting can incorporate climate-related financial risk emissions and climate-related risks.
Directing the federal government to develop and publish an annual assessment of its climate-related fiscal risk exposure reduce the federal government’s exposure through the President’s Budget and oversight of budget execution.
While the executive order only asks the Treasury and Labor Secretaries to “consider” specific actions, Walsh and Yellen said on a press call held Thursday that they intend to accomplish the recommended actions to the best of their ability. “This is a complex issue, but it’s simple to me,” said Walsh, emphasizing that protecting workers from climate-related financial risk is key to a thriving economy. The panel also assured reporters that the Treasury would create mandatory, standardized risk-disclosure rules and mitigation strategies across public and private financial systems. Said McCarthy, “This cannot be voluntary, this cannot be optional, the stakes are too high.”
Advocates are praising the order and say that it is crucial to protect the economy as the nation revolutionizes its energy infrastructure.
“Today’s order wisely acknowledges these transition risks while also emphasizing the need to make the financial system more resilient to future climate-driven extreme weather events and long-term environmental changes,” said Andres Vinelli, the vice president for Economic Policy at the Center for American Progress.
Others are happy to see the federal government wielding the full force of its regulatory power.
“Regulators have the tools to rein in these risky, dirty financing activities and safeguard our communities, and they need to use those tools now,” said Sierra Club financial advocacy campaign manager Ben Cushing. “These actions have the strong backing of the American people, who support a bold climate agenda and action to prevent another financial crash caused by Wall Street’s short-sighted gambles.”
by Ashira Morris, ODP Staff Writer China is often criticized for funding fossil fuel power infrastructure beyond its borders, and rightly so: it’s the top financier of overseas power plants, especially coal-fired ones. But they’re not the only ones continuing to finance coal and gas projects overseas. The US and Japan are a close second […]
This past May, President Biden signed an executive order on climate-related financial risk, a cross-governmental plan that directs federal agencies to identify and mitigate financial risks presented by climate change to Americans, businesses, and the government itself. Progress on this order was made over the weekend when Treasury Secretary Janet Yellen announced that the Financial Stability […]
Why This Matters: Money talks. Investors are increasingly willing to walk away from deals like oil and gas drilling projects in the Arctic or investments in fossil fuel companies that refuse to change their business models.
Our Daily Planet is your daily dose of the stories shaping our world and the ways that you can take action. From the climate crisis to the protection of biodiversity, if these issues matter to you then please subscribe & stay informed!
Your privacy is Important! We promise never to use your email address to send you spam or advertisements.