The order is a key lever in the Biden Administration’s climate agenda and puts the US closer in step with developments in Europe.
On May 20, 2021, President Joe Biden signed into effect an Executive Order on Climate-Related Financial Risk (Executive Order) aimed at addressing the threat that climate change poses to US financial stability. The Executive Order requires federal agencies, including financial regulators, to undertake work to advance clear and comparable disclosure of climate-related financial risks and act to mitigate such risk and its drivers.
The Biden Administration has taken a number of actions to enact a “whole of government” approach to climate change, including re-entering the Paris Agreement and directing every governmental agency to address environmental justice, the impacts of greenhouse gas emissions, clean energy financing, and more.
“The intensifying impacts of climate change present physical risk to assets, publicly traded securities, private investments, and companies,” said President Biden in the Executive Order. “The failure of financial institutions to appropriately and adequately account for and measure these physical and transition risks threatens the competitiveness of US companies and markets, the life savings and pensions of US workers and families, and the ability of US financial institutions to serve communities.” The Executive Order’s whole of government instruction for a government-wide climate-risk strategy calls for identifying the public and private means to achieving net carbon neutrality by 2050. Continue Reading