The Biden administration released a 40-page document titled “A Roadmap to Building a Climate Resilient Economy.” Dated October 14, 2021, it was prepared in accordance with Executive Order 14030, US Climate-Related Financial Risk, signed by President Biden on May 20, 2021.
The press release and backgrounder accompanying the document state, in part: âThis year alone, extreme weather conditions have devastated the US economy and affected one in three Americansâ¦ American families are paying the costs. Highlights of these documents are presented below.
Key Elements of Biden’s ‘Roadmap to Building a Climate Resilient Economy’
- The roadmap involves a wide variety of initiatives in several federal agencies.
- Federal budget processes and procurement standards are affected.
- The information provided by public companies, investment criteria and lending standards are also the subject of the document.
“Climate change poses a systemic risk”
âExtreme weather conditions have cost Americans an additional $ 600 billion in physical and economic damage in the past five years alone. Climate risks hidden in workers‘ pensions have already cost American retirees billions of dollars in lost pensions. our economy and our financial system, and we must take decisive action to mitigate the impacts. “
Some of the climate impacts cited in this section include forest fires and disruption of international and national supply chains.
“Protecting the Financial Health of Americans”
“By tackling the costs of the climate crisis head-on, the federal government will protect the economies of workers and families, stimulate the creation of well-paying union jobs, and ensure the long-term sustainability of America’s economic prosperity.” . The roadmap makes it clear that protecting the financial health of American households, deploying clean energy in the United States, and building a bottom-up and middle-of-the-road economy go hand in hand. “
Making the financial system more climate resilient
In an effort to make the US financial system more resilient to climate-related financial risks, the White House press release highlights these three initiatives:
First, the Financial Stability Oversight Council (FSOC) is preparing a report that will launch a process in which US financial regulators will develop âanalytical tools to mitigate climate-related financial risksâ.
Second, the Federal Insurance Office (FIO) of the US Department of the Treasury already assesses climate-related risks in the insurance industry, particularly “the availability and affordability of insurance coverage in high-risk areas for individuals. traditionally underserved communities â.
Third, the Securities and Exchange Commission (SEC) is developing new disclosure rules that “will bring greater clarity to investors on the significant risks and opportunities that climate change poses to their investments.”
Protect savings and investments
On October 13, 2021, the Department of Labor (DOL) proposed a rule “that would remove barriers to the ability of plan trustees to take into account climate change and other environmental, social and governance aspects.” [ESG] when they select investments and exercise their shareholder rights.
The Department of Labor is also working on the climate risk assessment for the Thrift Savings Plan (TSP), which covers nearly 6.5 million federal employees, making it the largest such plan in the world. .
The press release notes that the U.S. federal government is the world’s largest purchaser of goods and services, spending more than $ 650 billion in fiscal 2020 alone. New rules are being developed which âwould oblige agencies to take into account a supplier’s greenhouse gas emissions when making purchasing decisions and to give preference to offers from companies with less greenhouse gas emissions … [and] improve disclosure of greenhouse gas (GHG) emissions in federal contracts and establish science-based GHG targets. “
Federal financial management and budgeting
The Office of Management and Budget (OMB), federal agencies, and the Federal Accounting Standards Advisory Board (FASB) develop climate risk assessments and disclosure requirements for federal agencies.
Next year, the presidential budget for fiscal year 2023 “will include an assessment of the federal government’s climate risk exposure and impacts on the long-term fiscal outlook, as well as additional assessments.”
Federal loans and underwriting
Department of Housing and Urban Development (HUD), Department of Veterans Affairs (VA), Department of Agriculture (USDA) and Department of Treasury adjust their underwriting and lending standards “to better cope with risk finance for their loan portfolios, while ensuring the safety and security of communities most affected by climate change. “
Building resilient infrastructure and communities
The Federal Emergency Management Agency (FEMA) updates its National Flood Insurance Program (NFIP) standards.
Various federal agencies “have come together to build resilience to other types of more severe and extreme weather events, such as heat waves, droughts, storms and wildfires.”
“The National Ocean and Atmospheric Administration (NOAA) has released a suite of products to make federal government climate information more accessible to Americans.”
âMore than 20 agencies have released climate adaptation and resilience plans to protect federal investments – and taxpayer dollars – from the costs of climate change.