Today’s new executive order by the Biden administration on climate-related financial risk is a “bold, thoughtful and important step toward ensuring that every business across every sector of our economy is adequately preparing for the climate crisis,” said Ceres CEO and President Mindy Lubber.
This executive order will change practices and create opportunities in the federal budget and many federal agencies on climate risk, including, but not limited to:
Department of Treasury’s Financial Stability Oversight Council, Office of Financial Research and its Federal Insurance Office
The Labor Department
Federal Retirement Thrift Investment Board
Department of Housing and Urban Development
Department of Agriculture
“With this new executive order, President Biden and his talented team has taken another vital step showing how the climate crisis truly is an ‘all-of-government’ priority,” Lubber added. “This is especially timely given the sobering special report issued by the International Energy Agency (IEA) on Tuesday—stating that the window to build a net-zero energy sector by 2050 is narrow and will require an unprecedented transformation of how energy is produced, transported and used globally.
“With this new action by the Biden administration, investors, taxpayers and businesses will have the information they need to plan for a sustainable future and help our nation reach its critical climate goals. By requiring climate risk disclosure, companies will gain the insight they need to assess their climate footprint and exposure so that they can protect themselves and embrace opportunities.”
“This important executive order will bring our nation forward and make our businesses more competitive internationally, where strong climate standards already exist in many countries.”
During the past decade, the U.S. has dragged its feet on adopting various climate actions, including mandatory standards for disclosing climate risks, despite persistent calls from investors and advocates. But since President Biden took office, there has been a groundswell of support from administration officials, investors and even major U.S. companies.
For the first time, publicly-traded companies including Apple, HP, Salesforce, and Uber have announced public support for regulatory action by the SEC to mandate climate disclosure rules.
“The momentum behind the call for more transparency, including mandatory climate disclosure rules among U.S. financial regulators and companies, is simply a recognition that voluntary disclosure isn’t getting the job done,” Lubber added. “You simply cannot manage risks without measuring and disclosing them first. Mandatory rules are essential and will enable decision makers to make informed and sound investment and financial market decisions to address the climate crisis.”
Read Mindy’s column in Forbes: The time for mandatory disclosure is now.
In 2010, the SEC issued voluntary guidance in response to a petition filed by Ceres Investor Network members. In 2020, the Ceres Accelerator for Sustainable Capital Markets released a report outlining the systemic risks of climate change and calling on the SEC to mandate climate risk disclosure, among some 50 other regulatory action steps. Investors with more than $1 trillion in assets under management endorsed the report and sent letters to the heads of various financial regulatory agencies, urging them to take up its recommendations.
About Ceres
Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.