FACT SHEET: The Biden Administration’s Roadmap to Building an Economy Resilient to the Impacts of Climate Change
Agency actions will protect pension plans, homeowners, consumers, businesses and supply chains, workers and the federal government from the financial risks of climate change
Today, the Biden-Harris administration released a comprehensive government-wide strategy to measure, disclose, manage and mitigate the systemic risks that climate change poses to families, businesses and the U.S. economy – in building on measures already taken by the Biden-Harris administration. including this week only: a redesigned National Oceanic and Atmospheric Administration (NOAA) Climate.gov site to better connect Americans to climate rationale, data dashboards, and out-of-the-box educational resources in the classroom; the new rule proposed by the Ministry of Labor to protect life savings and pensions against climate risk; as well as the prior opinion of the Federal Acquisitions Council on a regulatory proposal aimed at taking greenhouse gas emissions into account when making procurement decisions.
This year alone, extreme weather conditions have shaken the US economy, affecting one in three Americans. International and domestic supply chains have been disrupted by climate change – from flooding in China and Texas, to wildfires that have burned nearly six million acres of land, supply chains in critical sectors such as housing, construction, semiconductors and agriculture have been affected. , causing delays and shortages for consumers and businesses. American families are paying the price. Extreme 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’ retirement plans have already cost American retirees billions of lost pension dollars. Climate change poses a systemic risk to our economy and our financial system, and we must take decisive action to mitigate its impacts.
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.
The administration’s whole-of-government strategy includes six main pillars to achieve the goals of the May 2021 presidential decree on climate-related financial risks, including several major announcements this week demonstrating concrete actions to protect American families, the federal government and the economics of climate-related financial risk:
Promote the resilience of the US financial system to climate-related financial risks.
- An upcoming Financial Stability Oversight Council (FSOC) report will launch the first step in a robust process for U.S. financial regulators developing the capacity and analytical tools to mitigate climate-related financial risks.
- The Federal Insurance Office of the Treasury Department has initiated a process to address climate-related risks in the insurance industry, with an emphasis on assessing the availability and affordability of insurance coverage in areas at high risk for traditionally underserved communities.
- In accordance with their statutory mandate, Securities and Exchange Commission (SEC) staff are developing recommendations to the Commission regarding a mandatory disclosure rule for public issuers that aims to further clarify investors as to material risks and opportunities. that climate change poses to their investments. This rule should be proposed in the coming months.
Protect life savings and pensions from climate-related financial risks.
- This week, the Labor Department announced it was proposing a rule that protects workers’ hard-earned life savings by clarifying that investment managers can factor climate change and other ESG factors into making investment decisions. The proposed rule – which, if finalized, would help protect more than half of American workers who participate in a pension plan through their work, representing more than 140 million Americans and more than 12 trillion retirement and pension savings dollars – would protect workers by making sure pension managers don’t overlook climate risks and other important factors. It would also make it clear that pension managers can take important environmental, social and governance factors into account when making investment decisions, so that workers can share in the gains that come from sustainable investments.
- The Ministry of Labor is also working to protect the nearly 6.5 million participants in the Thrift Savings Plan – the world’s largest defined benefit contribution plan – by analyzing how to further address climate-related risks.
Use federal government procurement to address climate-related financial risks.
- The federal government is the world’s largest buyer of goods and services, spending more than $ 650 billion on contracts in fiscal 2020 alone. This week, the Office of Management and Budget (OMB) announced that the Federal Acquisition Regulatory Council (FAR) Council will begin the process of reviewing changes to federal procurement regulations to require agencies to comply with take into account a supplier’s greenhouse gas emissions when making procurement decisions and to give preference to offers from companies that emit less greenhouse gases. As part of this work, the FAR Council this week published an advance notice of regulatory proposal to gather information to help key federal agency public procurement to minimize the risk of climate change.
- The FAR Council is also actively considering a change to federal government procurement regulations that would improve disclosure of greenhouse gas (GHG) emissions in federal contracts and establish science-based GHG targets. By identifying and mitigating climate risks through procurement, the federal government is leading by example in deploying public procurement policy as a tool to strategically shape markets and promote a more resilient economy.
Integrate climate-related financial risk into federal financial management and budgeting.
- The OMB, federal agencies, and the Federal Accounting Standards Advisory Board are taking steps to develop robust climate risk assessments and disclosure requirements for federal agencies.
- Next year, the President’s Fiscal Year 2023 budget 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.
- In addition, agencies will further integrate climate-related financial risk into agency budget and financial reporting to increase transparency and promote accountability.
Integrate climate-related financial risk intofederal loans and subscriptions.
- The Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA), the Department of Agriculture (USDA) and the Department of the Treasury are each working to improve the standards of their federal underwriting programs. and loans in order to better fight against climate change. financial risks associated with their loan portfolios, while ensuring the safety and security of communities most affected by climate change.
- HUD works to address the challenges that climate change poses to American homes, starting by identifying options for incorporating climate considerations into single-family mortgage issuance.
- The VA, which has nearly $ 913 billion in loan volume outstanding to U.S. veterans, is conducting a review of climate-related impacts on its home loan benefits program.
- USDA addresses climate risk in its own secured loan programs for detached houses, with the aim of applying lessons learned across its range of loan programs.
Building resilient infrastructure and communities
- This week, the Federal Emergency Management Agency (FEMA) began the process of updating its National Flood Insurance Program (NFIP) standards to help communities align their building and construction practices. land use with the latest data on flood risk reduction. Through a new request for information, FEMA will bring together stakeholder feedback to make communities more resilient and save lives, homes and money through potential revisions to standards that have not been officially put. up to date since 1976.
- In addition, 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.
- Also this week, the National Ocean and Atmospheric Administration (NOAA) released a suite of products to make the federal government’s climate information more accessible to Americans. NOAA updated its website to make it easier for governments, communities and businesses to access the data they need to prepare for and adapt to climate risks. And federal agencies have also released two reports that outline a comprehensive plan to further increase the open-access provision of climate tools and services to the public.
- More than 20 agencies have released climate change adaptation and resilience plans to protect federal investments – and taxpayer dollars – from the costs of climate change. The plans reflect President Biden’s whole-of-government approach to addressing the climate crisis as agencies integrate climate change preparedness into their missions and programs and build the resilience of federal assets to the accelerated impacts of climate change.
These measures will help protect the economies of workers and families, stimulate the creation of well-paying jobs, and ensure the long-term sustainability of U.S. economic prosperity for decades to come. Together, they will help usher in a new era where climate-related financial risks are fully understood – where they are measured, disclosed, managed and mitigated across the economy for the benefit of American workers, families and businesses.