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Progress on this order was made over the weekend when Treasury Secretary Janet Yellen announced that the Financial Stability Oversight Council (FSOC), will assess the potential risk that climate change may pose to the financial stability of the United States as “the current financial system is not producing reliable disclosures.”
“The Executive Order also made clear this Administration’s policy to advance the disclosure of climate-related financial risks, which we will also explore through FSOC. This will complement the work of the SEC, which is currently reviewing existing guidance on climate-related financial disclosures.”
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 President Biden in his executive order.
Going Global: As AP reported, Yellen said the United States also intended to enlist the support of the International Monetary Fund, the World Bank and other multilateral development banks to focus more resources on combating climate change. The World Bank and the regional development banks are leading sources of the loans used by poor nations for dams and other development projects.
She said the administration is backing international efforts to mobilize $100 billion per year from a variety of public and private sources to support efforts by developing countries to combat climate change.
Yellen said she planned to convene a meeting of the heads of the international lending institutions to discuss ways to better align their efforts with the Paris climate agreement.
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.
American financiers are moving to divest from fossil fuels to help the U.S. reach net-zero carbon emissions, but some state Republicans are fighting back. Fifteen Republican state treasurers are now threatening to pull hundreds of billions of dollars worth of assets from large financial institutions if they move forward decarbonizing their portfolios per a letter they wrote to Climate Envoy John Kerry.
Why This Matters: Banks and financiers have invested billions in destructive environmental practices. Deforestation funded by the world’s largest banks increased in 2020 despite COVID-19.
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 […]
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