November 28, 2023

US President Joe Biden will make a remark on April 23, 2021 and will attend the White House virtual summit on Climate Change Session 5: The Economic Opportunities of Climate Action in Washington, DC.

Jim Watson | AFP | Getty Images

President Joe Biden is instructing the federal government to develop a strategy to contain the risk of climate change for public and private financial assets in the United States, the White House said on Thursday.

The executive order, entitled “Climate-Related Financial Risk,” directs national climate advisor Gina McCarthy and National Economic Council director Brian Deese to develop a government-wide plan to identify and disclose climate risk to government programs, assets and liabilities within the next 120 days .

The ordinance also requires Treasury Secretary Janet Yellen, head of the Financial Stability Oversight Council, to submit a report on financial risk data related to climate change. The board includes the Chairman of the US Federal Reserve, Jerome Powell, and the heads of the Securities and Exchange Commission.

The move is part of the Biden administration’s longer-term agenda to cut U.S. greenhouse gas emissions nearly in half by 2030 and move to a net-zero economy by mid-century while containing the damage climate change is causing to all economic sectors should be.

“The agency’s actions, unleashed today by the President’s directive, will help protect the financial security of American families, businesses and workers from the climate-related financial risks to which they are already exposed,” said a news release White House released information sheet.

“We know that the climate crisis, be it due to rising seas or extreme weather, already harbors increasing risks for infrastructure, investments and companies,” it says. “However, these risks are often hidden.”

CNBC policy

Read more about CNBC’s political coverage:

Biden’s mandate follows a recent report by the International Energy Agency warning that the road to a net-zero future is “tight” with many countries failing to support various carbon emissions commitments and an end to investing in new ones Call for fossil fuel projects.

Tracey Lewis, a senior climate finance policy analyst at international environmental group, said the president’s order must mobilize the entire financial sector to end fossil fuel financing.

“The Federal Reserve must play its key role in addressing the climate crisis, including Biden’s appointment of a true climate leader to redefine the Fed in its role as the People’s Bank,” said Lewis.

Biden’s order instructs Secretary of Labor Marty Walsh to repeal or revise the Trump administration’s rules to prevent investment firms from considering environmental, social and governance factors such as climate risk when making investment decisions. A move the Biden administration said will help protect workers’ pensions.

At Biden’s orders, the federal government will also prepare and publish a climate risk assessment to support Biden’s budget projections.