U.S. Secretary of the Treasury Janet Yellen expressed support today for sustainability reporting initiatives, including the TCFD climate reporting framework, and the IFRS initiative towards developing a climate disclosure standard.
In a statement to the Institute of International Finance, Yellen outlined her vision of the role of Treasury in the Biden administration’s climate actions. Biden has made climate action a key focus of his new administration, taking a whole-of-government approach to address climate change. According to Yellen, “after sitting on the sidelines for four years, the U.S. government is fully committed to rejoin the fight against climate change. President Biden has outlined an ambitious strategy to transition the United States to net-zero emissions and has mobilized the entire government to achieve it.”
Concerning the role of Treasury, Yellen added:
“At Treasury, our goal is to take this “whole-of-government” approach and turn it into a “whole-of-economy” approach. We recognize the importance of public sector investment, particularly in green infrastructure, to facilitate the transition to net-zero emissions. The policy steps the Administration has proposed provide clarity on the path forward, helping households, businesses, and investors plan and invest. We also recognize the financial sector has an opportunity to play an important role in financing and leading the transition of the global economy to a net-zero economy.”
One of the key issues identified by Yellen was the mobilization of capital from the private sector towards financing the green transition. One of the key obstacles to opening of sustainable finance flows, according to the Treasury Secretary is the lack of reliable, consistent, and comparable disclosures needed for investors to accurately compare climate-related risks and opportunities across companies. To help address these issues, Yellen pointed to the existing and emerging initiatives to set climate and sustainability reporting standards, with an endorsement of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) climate disclosure framework, and well as expressing her support for the International Financial Reporting Standards Foundation’s (IFRS) work to establish a Sustainability Standards Board that will focus first on developing a climate disclosure standard.
Yellen also stated that Treasury will work with the SEC as it reviews its own rules for sustainability reporting requirements by companies.
Welcoming the Treasury Secretary’s announcements, the TCFD tweeted:
“My goal, at Treasury, is to support this work with a whole-of-economy approach. Specifically, we are committed to directing public investment to areas that can facilitate our transition to net-zero and strengthen the functioning of our financial system so that workers, investors, and businesses can seize the opportunity that tackling climate change presents.”