Climate-Related Financial Risk
| Published date | 25 May 2021 |
| Citation | 86 FR 27967 |
| Record Number | 2021-11168 |
| Section | Presidential Documents |
| Court | Executive Office Of The President |
Federal Register, Volume 86 Issue 99 (Tuesday, May 25, 2021)
[Federal Register Volume 86, Number 99 (Tuesday, May 25, 2021)]
[Presidential Documents]
[Pages 27967-27971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11168] Presidential Documents
Federal Register / Vol. 86, No. 99 / Tuesday, May 25, 2021 /
Presidential Documents
___________________________________________________________________
Title 3--
The President
[[Page 27967]]
Executive Order 14030 of May 20, 2021
Climate-Related Financial Risk
By the authority vested in me as President by the
Constitution and the laws of the United States of
America, it is hereby ordered as follows:
Section 1. Policy. The intensifying impacts of climate
change present physical risk to assets, publicly traded
securities, private investments, and companies--such as
increased extreme weather risk leading to supply chain
disruptions. In addition, the global shift away from
carbon-intensive energy sources and industrial
processes presents transition risk to many companies,
communities, and workers. At the same time, this global
shift presents generational opportunities to enhance
U.S. competitiveness and economic growth, while also
creating well-paying job opportunities for workers. 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. In this
effort, the Federal Government should lead by example
by appropriately prioritizing Federal investments and
conducting prudent fiscal management.
It is therefore the policy of my Administration to
advance consistent, clear, intelligible, comparable,
and accurate disclosure of climate-related financial
risk (consistent with Executive Order 13707 of
September 15, 2015 (Using Behavioral Science Insights
to Better Serve the American People)), including both
physical and transition risks; act to mitigate that
risk and its drivers, while accounting for and
addressing disparate impacts on disadvantaged
communities and communities of color (consistent with
Executive Order 13985 of January 20, 2021 (Advancing
Racial Equity and Support for Underserved Communities
Through the Federal Government)) and spurring the
creation of well-paying jobs; and achieve our target of
a net-zero emissions economy by no later than 2050.
This policy will marshal the creativity, courage, and
capital of the United States necessary to bolster the
resilience of our rural and urban communities, States,
Tribes, territories, and financial institutions in the
face of the climate crisis, rather than exacerbate its
causes, and position the United States to lead the
global economy to a more prosperous and sustainable
future.
Sec. 2. Climate-Related Financial Risk Strategy. The
Assistant to the President for Economic Policy and
Director of the National Economic Council (Director of
the National Economic Council) and the Assistant to the
President and National Climate Advisor (National
Climate Advisor), in coordination with the Secretary of
the Treasury and the Director of the Office of
Management and Budget (OMB), shall develop, within 120
days of the date of this order, a comprehensive,
Government-wide strategy regarding:
(a) the measurement, assessment, mitigation, and
disclosure of climate-related financial risk to Federal
Government programs, assets, and liabilities in order
to increase the long-term stability of Federal
operations;
(b) financing needs associated with achieving net-
zero greenhouse gas emissions for the U.S. economy by
no later than 2050, limiting global average temperature
rise to 1.5 degrees Celsius, and adapting to the acute
and chronic impacts of climate change; and
[[Page 27968]]
(c) areas in which private and public investments
can play complementary roles in meeting these financing
needs--while advancing economic opportunity, worker
empowerment, and environmental mitigation, especially
in disadvantaged communities and communities of color.
Sec. 3. Assessment of Climate-Related Financial Risk by
Financial Regulators. In furtherance of the policy set
forth in section 1 of this order and consistent with
applicable law and subject to the availability of
appropriations:
(a) The Secretary of the Treasury, as the Chair of
the Financial Stability Oversight Council (FSOC), shall
engage with FSOC members to consider the following
actions by the FSOC:
(i) assessing, in a detailed and comprehensive manner, the climate-related
financial risk, including both physical and transition risks, to the
financial stability of the Federal Government and the stability of the U.S.
financial system;
(ii) facilitating the sharing of climate-related financial risk data and
information among FSOC member agencies and other executive departments and
agencies (agencies) as appropriate;
(iii) issuing a report to the President within 180 days of the date of this
order on any efforts by FSOC member agencies to integrate consideration of
climate-related financial risk in their policies and programs, including a
discussion of:
(A) the necessity of any actions to enhance climate-related disclosures
by regulated entities to mitigate climate-related financial risk to the
financial system or assets and a recommended implementation plan for taking
those actions;
(B) any current approaches to incorporating the consideration of climate-
related financial risk into their respective regulatory and supervisory
activities and any impediments they faced in adopting those approaches;
(C) recommended processes to identify climate-related financial risk to
the financial stability of the United States; and
(D) any other recommendations on how identified climate-related financial
risk can be mitigated, including through new or revised regulatory
standards as appropriate; and
(iv) including an assessment of climate-related financial risk in the
FSOC's annual report to the Congress.
(b) The Secretary of the Treasury shall:
(i) direct the Federal Insurance Office to assess climate-related issues or
gaps in the supervision and regulation of insurers, including as part of
the FSOC's analysis of financial stability, and to further assess, in
consultation with States, the potential for major disruptions of private
insurance coverage in regions of the country particularly vulnerable to
climate change impacts; and
(ii) direct the Office of Financial Research to assist the Secretary of the
Treasury and the FSOC in assessing and identifying climate-related
financial risk to financial stability, including the collection of data, as
appropriate, and the development of research on climate-related financial
risk to the U.S. financial system.
Sec. 4. Resilience of Life Savings and Pensions. In
furtherance of the policy set forth in section 1 of
this order and consistent with applicable law and
subject to the availability of appropriations, the
Secretary of Labor shall:
(a) identify agency actions that can be taken under
the Employee Retirement Income Security Act of 1974
(Public Law 93-406), the Federal Employees' Retirement
System Act of 1986 (Public Law 99-335), and any other
relevant laws to protect the life savings and pensions
of United States workers and families from the threats
of climate-related financial risk;
(b) consider publishing, by September 2021, for
notice and comment a proposed rule to suspend, revise,
or rescind ``Financial Factors in Selecting
[[Page 27969]]
Plan Investments,'' 85 Fed. Reg. 72846 (November 13,
2020), and ``Fiduciary Duties Regarding Proxy Voting
and Shareholder Rights,'' 85 Fed. Reg. 81658 (December
16, 2020);
(c) assess--consistent with the Secretary of
Labor's oversight responsibilities under the Federal
Employees' Retirement System Act of 1986 and in
consultation with the Director of the National Economic
Council and the National Climate Advisor--how the
Federal Retirement Thrift Investment Board has taken
environmental, social, and governance factors,
including climate-related financial risk, into account;
and
(d) within 180 days of the date of this order,
submit to the President, through the Director of the
National Economic Council and the National Climate
Advisor, a report on the actions taken pursuant to
subsections (a), (b), and (c) of this section.
Sec. 5. Federal Lending, Underwriting, and Procurement.
In furtherance of the policy set forth in section 1 of
this order and consistent with applicable law and
subject to the availability of appropriations:
(a) The Director of OMB and the Director of the
National Economic Council, in consultation with the
Secretary of the Treasury, shall 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. The
recommendations should evaluate options to enhance
accounting standards for Federal financial reporting
where appropriate and should identify any opportunities
to further encourage market adoption of such standards.
(b) The Federal Acquisition Regulatory Council, in
consultation with the Chair of the Council on
Environmental Quality and the heads of other agencies
as appropriate, shall consider amending the Federal
Acquisition Regulation (FAR) to:
(i) require major Federal suppliers to publicly disclose greenhouse gas
emissions and climate-related financial risk and to set science-based
reduction targets; and
(ii) ensure that major Federal agency procurements minimize the risk of
climate change, including requiring the social cost of greenhouse gas
emissions to be considered in procurement decisions and, where appropriate
and feasible, give preference to bids and proposals from suppliers with a
lower social cost of greenhouse gas emissions.
(c) The Secretary of Agriculture, the Secretary of
Housing and Urban Development, and the Secretary of
Veterans Affairs shall consider approaches to better
integrate climate-related financial risk into
underwriting standards, loan terms and conditions, and
asset management and servicing procedures, as related
to their Federal lending policies and programs.
(d) As part of the agency Climate Action Plans
required by section 211 of Executive Order 14008 of
January 27, 2021 (Tackling the Climate Crisis at Home
and Abroad), and consistent with the interim
instructions for the Climate Action Plans issued by the
Federal Chief Sustainability Officer, heads of agencies
must submit to the Director of OMB, the National
Climate Task Force, and the Federal Chief
Sustainability Officer actions to integrate climate-
related financial risk into their respective agency's
procurement process (subject to any changes to the FAR
arising out of the Federal Acquisition Regulatory
Council's review pursuant to subsection (b) of this
section). The Director of OMB and the Federal Chief
Sustainability Officer shall provide guidance to
agencies on existing voluntary standards for use in
agencies' plans.
(e) In Executive Order 13690 of January 30, 2015
(Establishing a Federal Flood Risk Management Standard
and a Process for Further Soliciting and Considering
Stakeholder Input), a Federal Flood Risk Management
Standard (FFRMS) was established to address current and
future flood risk and ensure
[[Page 27970]]
that projects funded with taxpayer dollars last as long
as intended. Subsequently, the order was revoked by
Executive Order 13807 of August 15, 2017 (Establishing
Discipline and Accountability in the Environmental
Review and Permitting Process for Infrastructure
Projects). Executive Order 13690 is hereby reinstated,
thereby reestablishing the FFRMS. The ``Guidelines for
Implementing Executive Order 11988, Floodplain
Management, and Executive Order 13690, Establishing a
Federal Flood Risk Management Standard and a Process
for Further Soliciting and Considering Stakeholder
Input'' of October 8, 2015, were never revoked and thus
remain in effect.
Sec. 6. Long-Term Budget Outlook. The Federal
Government has broad exposure to increased costs and
lost revenue as a result of the impacts of unmitigated
climate change. In furtherance of the policy set forth
in section 1 of this order and consistent with
applicable law and subject to the availability of
appropriations:
(a) The Director of OMB, in consultation with the
Secretary of the Treasury, the Chair of the Council of
Economic Advisers, the Director of the National
Economic Council, and the National Climate Advisor,
shall identify the primary sources of Federal climate-
related financial risk exposure and develop
methodologies to quantify climate risk within the
economic assumptions and the long-term budget
projections of the President's Budget;
(b) The Director of OMB and the Chair of the
Council of Economic Advisers, in consultation with the
Director of the National Economic Council, the National
Climate Advisor, and the heads of other agencies as
appropriate, shall develop and publish annually, within
the President's Budget, an assessment of the Federal
Government's climate risk exposure; and
(c) The Director of OMB shall improve the
accounting of climate-related Federal expenditures,
where appropriate, and reduce the Federal Government's
long-term fiscal exposure to climate-related financial
risk through formulation of the President's Budget and
oversight of budget execution.
Sec. 7. General Provisions. (a) Nothing in this order
shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or
the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget
relating to budgetary, administrative, or legislative proposals.
(b) This order shall be implemented consistent with
applicable law and subject to the availability of
appropriations.
[[Page 27971]]
(c) This order is not intended to, and does not,
create any right or benefit, substantive or procedural,
enforceable at law or in equity by any party against
the United States, its departments, agencies, or
entities, its officers, employees, or agents, or any
other person.
(Presidential Sig.)
THE WHITE HOUSE,
May 20, 2021.
[FR Doc. 2021-11168
Filed 5-24-21; 11:15 am]
Billing code 3295-F1-P
