The Biden administration is taking action to address climate change’s economic consequences. Friday’s 40-page report outlines government-wide plans for protecting the financial, insurance, and housing markets as well as the savings of American families.
The report proposes that the government review its mortgage process, stock market disclosures and retirement plans. This is to allow the country to price in the climate change risks. This report follows a May executive order from President Joe Biden, which calls for the government to examine how extreme heat, flooding and storms could impact the world’s largest economy.
“If this year has taught us anything, it is that climate change presents an ongoing urgent, systemic risk for our economy, as well as the lives and livelihoods, of everyday Americans,” Gina McCarthy, White House national climate advisor, said to reporters.
A February storm that hit Texas in February caused widespread power outages, 210 fatalities and extensive property damage. West-coast states were hit hard by wildfires. The heat dome in Pacific Northwest caused record-breaking temperatures in Seattle, Oregon and Portland, Oregon. In August, Hurricane Ida ravaged Louisiana and caused severe flooding in the Northeast.
The Biden administration’s recommendations reflect a shift in the larger climate change discussion. It suggests that the nation should prepare for the cost that investors, families and governments will have to bear.
This report also aims to show the world how serious the U.S. government regards climate change ahead the United Nations Climate Change Conference, which will be held in Glasgow (Scotland) from Oct. 31 through Nov. 12.
The Financial Stability Oversight Council of the government is one of the steps. It will be developing tools to reduce climate-related economic risks. The Treasury Department will address insurance sector risks and ensure that coverage is available. The Securities and Exchange Commission examines mandatory disclosure rules regarding the risks and opportunities posed by climate change.
Wednesday’s Labor Department proposal was made by the Office of Management and Budget for investment managers to consider environmental factors when making decisions about retirement savings and pensions. The Office of Management and Budget announced that the government will ask federal agencies to examine greenhouse gas emissions from companies providing supplies. Biden’s fiscal 2023 budget proposal will include a climate risk assessment.
Federal agencies that lend and mortgage homes are monitoring the market for housing. The Department of Housing and Urban Development and partners are developing disclosures to homebuyers and flood-related risks. Climate risks will be considered by the Department of Veterans Affairs for its home lending program.
The Federal Emergency Management Agency is currently updating standards for its National Flood Insurance Program. This could include revising guidelines dating back to 1976.
McCarthy stated that “we now recognize that climate change poses a systemic threat.” “We need to examine fundamentally how the federal government does its work and how we view the stability of the financial system.”