The Biden administration announced the publication of its comprehensive government-wide strategy to address and mitigate the financial and economic risks of climate change. The report, “A Roadmap to Build a Climate-Resistant Economy,” highlights a broad range of actions being taken by federal government agencies and regulators under the direction of the administration, including integrating climate strategies into their activities, developing and promoting better understating and disclosure of climate risks, and improving the climate resilience of supply chains, among other actions.
The strategy recognizes the need to measure analyze and disclose on the financial and economic impact of climate risks, and focuses heavily on improving practices in these areas. Key highlights in the report include the Biden administration’s efforts to initiate a process, to be detailed in an upcoming Financial Stability Oversight Council report, to have regulators develop the capacity and analytical tools to mitigate climate-related risks.
The report also highlights the Securities and Exchange Commission’s (SEC) ongoing development of a recommendation for mandatory disclosure of climate risks by public company. Recently, SEC chair Gary Gensler said that he anticipates having a proposal for mandatory reporting by the end of the year.
The administration’s report also pointed to actions it is taking to protect personal savings and investments from climate risk. These efforts include new rules proposed last week by the Department of Labor (DOL) removing significant barriers for ERISA pension fund managers – representing trillions of dollars of retirement savings and investment assets – to incorporate ESG and climate considerations in their investment strategies.
Additionally, the strategy focuses on the need to address climate risks in the insurance sector, including assessing the availability and affordability of coverage in high-risk areas for underserved communities.
Some of the other key actions highlighted by the report include actions relating to government procurement, with new rules being put in place requiring federal agencies to consider the GHG emissions profiles of suppliers, and give preference too lower-footprint suppliers, and improving climate disclosure in contracting.
The administration also said that it will include an assessment of the Federal Government’s climate risk exposure and impacts on the long-term budget outlook in next year’s 2023 President’ Budget.
In the foreword to the report, Brian Deese, Director, White House National Economic Council, and Gina McCarthy, White House National Climate Advisor, said:
“By sustaining the status quo, we not only face the mounting repercussions of climate change, but also bear the opportunity cost of missing out on an historic chance for job creation, shared prosperity, and a more resilient future. The United States must integrate climate risks throughout all relevant aspects of the economy and financial system.”