Biden shows plan to address major financial risks posed by climate change

Business

U.S. President Joe Biden delivers remarks on the September jobs numbers in the South Court Auditorium in the Eisenhower Executive Office Building on October 08, 2021 in Washington, DC.
Chip Somodevilla | Getty Images

The Biden administration on Friday unveiled a government-wide plan to address the systemic threat climate change poses to all sectors of the economy.

The roadmap is part of the Biden administration’s longer-term agenda to slash domestic greenhouse gas emissions nearly in half by 2030 and transition to a net-zero economy by mid-century while mitigating the impact of climate change on the economy.

Worsening climate-related disasters like heatwaves, drought, floods and wildfires threaten to upend the stability of the global financial system.

This year, extreme weather events affected one in three Americans, according to federal disaster declarations, and interrupted supply chains across the country. In the past five years, extreme weather has cost Americans more than $600 billion in damages, according to the National Oceanic and Atmospheric Administration.

The administration’s plan accounts for how climate change will affect the companies people are invested in, and aims to protect the savings and pensions of American families with retirement plans. Climate-related risks in retirement plans have already cost American retirees billions in lost pension dollars, according to a fact sheet released by the White House.

The Department of Labor “is leading efforts to remove regulatory barriers and ensure that employee benefit plan fiduciaries can incorporate material climate-related risks into their investment decisions,” says the report. “These efforts will better protect the life savings of America’s workers and their families from the impacts of climate change, and could also mobilize capital towards sustainable investments.”

The roadmap also identifies how agencies can strengthen the resilience of infrastructure in response to worsening climate disasters. It shows how agencies can leverage federal procurement to address climate-related financial risk, as well as incorporate climate-related risk into federal lending and budgeting.

This month, more than 20 federal agencies published climate adaptation plans revealing the biggest threats climate change poses to their operations and facilities and how they plan to handle them.

“Climate change poses a risk to our economy and to the lives and livelihoods of Americans, and we must act now,” National Climate Advisor Gina McCarthy told reporters during a press call on Thursday. “This roadmap isn’t just about protecting our financial system — it’s about protecting people, their paychecks and their prosperity.”

“We are clear-eyed to how climate change poses a systemic risk to our economy,” Bharat Ramamurti, deputy director of the National Economic Council, said on the press call. “We are taking a precautionary approach that reflects the fact that inaction is not an option.”

The report is called “A Roadmap to Build a Climate-Resilient Economy.”

President Biden has also called on Treasury Secretary Janet Yellen, the head of the Financial Stability Oversight Council, and financial regulators to produce a report on climate financial risk data. That report isn’t out yet.

The president and first lady are set to travel to Europe in two weeks, with the global climate crisis on the forefront of Biden’s agenda. Biden will also travel to Glasgow, Scotland, to attend the United Nations Climate Change Conference of the Parties, or COP26, at the start of November.

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