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- A new executive order asks public and private entities to incorporate climate-related risks into budget calculations.
- It emphasizes the need to make sustainable investment decisions, particularly around worker pensions.
- “This cannot be optional. The stakes are simply too high. The federal government has to lead by example,” White House climate adviser Gina McCarthy said.
President Biden signed a new executive order Thursday that instructs select government agencies and financial institutions to account for risks related to climate change to guide agencies, corporations and individuals in making major financial decisions.
Titled the Executive Order on Climate-Related Financial Risk, the National Climate Advisor and the Director of the National Economic Council are set to develop a whole-of-government plan that will identify financial risks directly linked to climate change surrounding government programs, assets, and liabilities.
The order will direct agencies to analyze, mitigate and disclose the risk that climate change poses to homeowners, businesses, the financial system and the federal government. By making these risks public, according to the order, Americans can know how climate change might affect their new home, small business or life savings, for instance.
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The goal is to locate financial gaps to determine where extra financing should be in regards to the U.S. budget.
In addition to pinpointing these climate-related risks, the executive order also encourages financial regulators to take climate change risks into account, specifically calling on the U.S. Treasury Secretary to pinpoint financial weaknesses in the federal government.
The Labor Secretary is also asked to consider revoking previous rules implemented by former administrations that bar investment firms from taking environmental and climate-related factors into account in investment decisions, especially related to worker pensions.
“This cannot be optional. The stakes are simply too high. The federal government has to lead by example,” White House climate adviser Gina McCarthy told press.
“Americans should be able to know the real risks that extreme weather and rising seas pose to the homes that they’ve invested in or the small businesses that they’ve built up,” she added. “Their hard-earned retirement shouldn’t be wiped out by the impacts of climate change or irresponsible investors.”
This order is the latest installment in Biden’s plan to overhaul U.S. infrastructure to have an economy that reaches net-zero carbon emissions by 2030.
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