President Biden Signs New Order to Mitigate Financial Risk in Fight Against Climate Change

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(Getty Images / Alex Wong)

By Zohd Khan 

President Joe Biden recently signed a new executive order to help deal with “Climate-Related Financial Risk”. 

The order, which was released to the public last Thursday, May 20, recognized that the measures taken to combat climate change are often risky for businesses and companies. Examples of such risks include supply chain disruptions and transition risks for companies that may have a difficult time shifting away from carbon-intensive energy sources. 

Given these potential risks, the order explained that “the failure of financial institutions to appropriately and adequately account for and measure these physical and transition risks threatens the competitiveness of U.S. companies and markets, the life savings and pensions of U.S. workers and families, and the ability of U.S. financial institutions to serve communities.” 

The passage of this executive order is intended to decrease the likelihood of this threat on the U.S. economy while still reaching the target goal of a “net-zero emissions economy” by 2050.

President Biden stated that he has ordered the assistants of various government agencies to devise a “comprehensive, government wide-strategy” to mitigate this financial risk in the next 120 days (starting from the date of the order). 

One objective of the strategy will be to “develop recommendations for the National Climate Task Force on approaches related to the integration of climate-related financial risk into Federal financial management and financial reporting, especially as that risk relates to Federal lending programs.”

Furthermore, the order will consider amending the Federal Acquisition Regulation (FAR) to require major federal suppliers to disclose data on greenhouse gas emissions and other climate-related issues that could result in financial risk. This data can help government agencies set “science-based reduction targets.” 

Another proposed amendment to the Federal Acquisition Regulation will be to ensure Federal agency decisions are always mindful of the social costs of greenhouse gas emissions and to give preference to suppliers who are also mindful of these costs. 

This new executive order also reinstated the effects of past Executive Order 13960, which established a “Federal Flood Risk Management Standard” and focused on addressing the financial burdens that come with flood risk. 

The White House also released a fact sheet on this executive order. The fact sheet emphasized that the government has a desire to “safeguard the financial security of America’s families, businesses, and workers from the climate-related financial risks they are already facing”. 

Throughout the statement, the White House placed continual focus on the government’s responsibility in “empowering the American people to make informed financial decisions”. 

One additional priority mentioned in the fact sheet was for the government to “bolster the resilience of life savings and pensions”. 

Ben Cushing, the financial advocacy campaign manager at Sierra Club, stated that “It’s really promising that President Biden is recognizing the enormous systemic risks of the climate crisis”.

Cushing also mentioned that the deadline of within 180 days for a detailed strategy is appropriate, mainly because a United Nations Climate Change Conference is scheduled to take place in early November.

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21 thoughts on “President Biden Signs New Order to Mitigate Financial Risk in Fight Against Climate Change”

  1. Ron Oertel

    The passage of this executive order is intended to decrease the likelihood of this threat on the U.S. economy while still reaching the target goal of a “net-zero emissions economy” by 2050.

    I don’t think so.

    One additional priority mentioned in the fact sheet was for the government to “bolster the resilience of life savings and pensions”.

    Oh, cool!  Why didn’t anyone else think of that?  🙂

    Seems so obvious, now!

    This new executive order also reinstated the effects of past Executive Order 13960, which established a “Federal Flood Risk Management Standard” and focused on addressing the financial burdens that come with flood risk.

    Is this referring to the federal government’s funding of levees, so that development can occur in floodplains? With the subsequent “literal bailout” when those levees inevitably fail?

    Same type of question applies regarding approving development in high-risk fire zones. (“Paradise” is being rebuilt.)

    1. Don Shor

      The FFRMS was established by President Obama via executive order. https://fas.org/sgp/crs/misc/IN10434.pdf
      It aimed “to improve the resilience of communities and federal assets against the impacts of flooding” and had “required that infrastructure projects receiving federal funds, as well as hospitals and schools, be built on higher ground than was previously necessary. It also called for the inclusion of up-to-date climate science in determining floodplains.”
      It was rescinded by President Trump. The National Association of Home Builders, as well as other industry associations, applauded Trump’s move.
      It is being reinstated by President Biden.

      1. Ron Oertel

        required that infrastructure projects receiving federal funds, as well as hospitals and schools, be built on higher ground than was previously necessary.

        Sounds like some useful “staging grounds” to rescue the rest of the community.  Some hospitals do include helicopter landing pads.  🙂

        I wonder how close that Oroville Dam came to collapsing about 3 years ago.  That was a substantial evacuation.

        On a related note, I’ve been told that insurance companies are permitted to “spread the cost” of high-risk zones to other, lesser-risk zones.  Probably a reason that insurance costs have been rising everywhere.

        Not to mention PG&E costs, which must be significantly higher to serve those zones (and pay for the resulting damage), which is also apparently “allocated” to everyone.

        Democrats are only slightly more-responsible than Republicans, regarding these issues. If I’m not mistaken, the local Democratic representative for Natomas supported federal funding for those levees. How much do you suppose the rezoning (and government-funded levee improvements) of that vast area was worth to politically-connected development interests?

        1. Bill Marshall

          I wonder how close that Oroville Dam came to collapsing about 3 years ago.

          Not very… but, in an over-abundance of caution, because the main spillway was compromised, they activated the emergency spillway… the rumors of possible “collapse”, or major breach, of the dam itself were not based in science, or engineering (applied science)… but the ‘threat’ (de minimus) was great fodder for the press… appealed to the liberal arts folk…

          An example… the Crystal Springs Dam, which provides for the water that comes from the O’Shaunessy dam, plus local drainage, and provides the water for much of the SF peninsula, is actually located across the San Andreas fault… the fault lies pretty much right underneath it… it existed in 1906, with a full reservoir behind it… it developed some minor leaks…

          “Collapse” means all the mass of the dam falls away, creates “coffer dams” downstream… NOT Armeggedon!  A problem, yes, to be sure, but all things considered, I’d rather live in the ‘disaster plain’ of the two dams I mentioned, or the Monticello dam (oh, wait, I do!), than in tornado and/or hurricane country… my risks are significantly less…

        2. Ron Oertel

          Not doubting you, but thought I’d look-up an article regarding this.

          On February 17, 2017, a crack opened up along the Dam’s spillway, a 3,000-foot-long concrete chute meant to guide water into the river. To lessen the burden on the spillway, engineers limited the amount of water it would release daily. However, this had the side affect of letting Lake Oroville, the second-largest reservoir in California, rise to extraordinarily high levels.

          The hillside holding the reservoir quickly began to dissolve under the pressure, threatening not only the dam itself but 188,000 residents nearby.

          With 1.2 million cubic yards of concrete poured in since then, the spillway has a new state-of-the-art drainage system. The $1.1 billion price tag far exceeds the initial price of $400 million, which shows how paying for infrastructure later often ends up costing more.

          (I wonder if the creation and installation of that concrete / repair was “carbon-dioxide free”?)  🙂

          https://www.popularmechanics.com/technology/infrastructure/a27029829/the-oroville-dam-almost-flooded-northern-california-now-its-working-again/#:~:text=Flooded%20Northern%20California.-,Now%20It's%20Working%20Again.,infrastructure%20gets%20an%20expensive%20repair.&text=Two%20years%20ago%2C%20the%20Oroville,evacuate%20from%20rural%20northern%20California.

  2. Chris Griffith

    Dear Mr President

    I know you read the Davis Vanguard every day therefore this what you need to consider 😃
    The climate is always changing. It changed 1 billion years ago, 1000 years ago, and today and all the times in between sometimes even more rapidly than it does today.
    The sky has been falling and the ecosystem has been collapsing according to the pseudo-environmentalist wack-jobs since the 1960s. See that big glowing yellow ball in the sky? It’s called the SUN. The SUN is mostly responsible for the changing climate. Furthermore, it’s impossible for the climate NOT to change.
     
    This is just one person’s humble opinion.

    1. Ron Oertel

      The SUN is mostly responsible for the changing climate.

      No comment on that, but it does cause skin cancer – especially for those of us who are melanin-challenged. That damn thing is hazardous! 🙂

      Maybe Darwinism will ultimately take care of that problem, and solve a few other “social justice” issues in the process – in the eyes of some. 🙂

      Hey, my two smiley-face “suns” are in perfect alignment. Double hazard!

       

        1. Ron Oertel

          I’m tempted to say that I’m waiting for Dr. Fauci’s opinion, regarding that.  🙂

          But the part that’s unexplained in Chris’ comment is how he thinks the sun is changing, to create a changing climate.

          The thing that is changing is the makeup of the atmosphere.

          I generally don’t doubt mainstream science. But I also don’t find it useful to debate national/worldwide issues on a local blog. Plus, this horse has been beaten beyond-death, for years now.

          However, I don’t believe that the goals stated in this article will be achieved.

          1. David Greenwald

            “I generally don’t doubt mainstream science. But I also don’t find it useful to debate national/worldwide issues on a local blog. Plus, this horse has been beaten beyond-death, for years now.”

            This is really a silly comment which I think is an attempt to take a shot at this site.

            But let me point out the following in contradictions:

            (1) This issue is not beaten to death because it’s still a live issue
            (2) This site is no longer simply a local site
            (3) Even if it were, the structure of US House races means they are a series of local elections, NOT a national one
            and (4) Even the US Senate and President, are actually a series of state elections, not a national one
            (5) Therefore even at the local level this is a relevant issue.

        2. Ron Oertel

          Therefore even at the local level this is a relevant issue.

          This is coming from someone who said that a development proposal with 5,000+ parking spots adjacent to freeway access points makes no difference, regarding greenhouse gasses.  🙂

          And yet, thinks he can influence national policy regarding an issue that has been thoroughly discussed/analyzed beyond this blog.

          1. David Greenwald

            It’s interesting that you have shifted your argument. Your original comment: “I also don’t find it useful to debate national/worldwide issues” to “thinks he can influence national policy” – two very different things, and point out, I didn’t write the article. I never once said influence. You completely ignored the point I made pertaining to the localization of national issues. It’s just more potshots from Ron Oertel.

        3. Ron Oertel

          I’m not criticizing the article.

          I view it as more of a political announcement, which is short on details or how that’s to be achieved. And at an “average citizen” level, I’m not convinced that some understand just how deeply fossil fuels and extractive industries are embedded into the economy – and the way we live. And that would include some of the “bicyclists” among us.

          (See the impacts of the dam repair described above, as an example.)

          Therefore even at the local level this is a relevant issue.

          Pretty sure that I just provided an example of a “locally-relevant” issue.

  3. Chris Griffith

    Maybe Darwinism will ultimately take care of that problem

    funny you should bring up the term Darwinism. I’ve heard that the cancel culture has determined that Darwin was a racist so you better watch out how you throw the word Darwinism around.

     

  4. Chris Griffith

    But the part that’s unexplained in Chris’ comment is how he thinks the sun is changing, to create a changing climate.

     
    Mars had undergone a very nasty climate change and the peculiar thing is, Mars has no humans. Anyone care to explain what happened to Mars without the involving the Homo Sapiens Sapiens ?

    1. Bill Marshall

      It is far more than the sun… it (the sun) has some influences, particularly as to weather… climate, not so much… there is starting to be some evidence that what happened on Mars, was due to ‘inner Mars’… and/or ‘outside influences’ by meteors, etc.

      Historically, climatic change has had more to do with ‘inner earth’ processes… volcanic, tectonic plate activity, and also “foreign objects”… which (in conjunction with inner earth processes, that we have yet to fully understand) is largely believed to have set off the climatic changes that ended the ‘age of the dinosaurs’, long before there were what we know as humans…

  5. Chris Griffith

    President Biden Signs New Order to Mitigate Financial Risk in Fight Against Climate Change”

    The green New deal and this fight against climate change is a total scam it is simply about the redistribution of wealth plain and simple. The growth in solar PV and EV cannot be sustained for much longer. Use your math skills to tell me how much mining for silicon, lithium, cobalt, and other minerals we will need to maintain this growth and compare that to the growth seen in these mining efforts, and how fast they must grow to meet this demand to reach beyond “minuscule” market share. Solar power and EVs will be a fad that will see an end once it is shown the markets cannot keep up with demand. The prices of EVs will spike as supply fails to meet demand or demand will simply fall off to better match supply as people find new options or just keep the old options. The only people that’s going to lose in this is the taxpayer having to pay for all these damn subsidies and freebies.

    This is just one person’s opinion (on investing)

    1. Bill Marshall

      tell me how much mining for silicon, lithium, cobalt, and other minerals we will need to maintain this growth and compare that to the growth seen in these mining efforts

      Silicon?  One of the most ubiquitous minerals on the planet!  You may have a point on the other elements, but, not silicon…

      Silicon – Wikipedia

      See “occurrence” subheading… 7th most prevalent element in the known universe…

      When someone posits several things, one of which is untrue, it calls into question the rest of the narrative…

      As to “investing”, I do mutual funds, not specific stocks… pretty sure some of the underlying investments are in EV’s, PV’s, and minerals… my portfolio has been long on upward trends… also includes NG, oil, coal etc.

      Your posit/post is questionable, particularly as EV’s often rely on NG, coal, oil, nuclear, hydro, not so much solar, to produce the energy that charges them…

       

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