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White House Seeks to Mitigate Climate-Related Financial Risk With New Executive Order

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President Biden has signed an executive order to direct the director of the National Economic Council and the national climate adviser to create within 120 days a government-wide strategy to identify climate-related financial risk to government assets, programs and liabilities.

The EO calls for the secretary of the Department of the Treasury to work with members of the Financial Stability Oversight Council to evaluate the climate-related financial risk to the stability of the U.S. financial system and federal government and come up with a report within 180 days on recommended measures to help address risks to financial stability, the White House said Thursday.

Under the new policy, the secretary of the Department of Labor should consider rescinding or suspending any rules from the previous administration that would have prevented investment companies from taking a look at climate-related risks and other environmental and social factors in their investment decisions with regard to workers’ pensions.

The new administration will also require federal suppliers to divulge climate-linked financial risks and greenhouse gas emissions and ensure that major agency procurements reduce the risk of climate change.

The federal government should publish an annual assessment of its climate-associated fiscal risk exposure, while the Office of Management and Budget (OMB) should help the federal government minimize that exposure to such financial risk “through the formulation of the President’s Budget and oversight of budget execution.”

In early May, the president also issued an executive order that calls for the creation of the climate change support office within the State Department.