Climate-Related Financial Risk

Record & deadlines

1. May 20, 2021Signed

   Signed by the President

2. May 25, 2021FR published

   Published in the Federal Register · 86 FR 27967

   Federal Register PDF
3. Nov 16, 2021

   FSOC report to President on agency integration efforts

4. Nov 16, 2021

   Labor Secretary report on pension protection actions

5. Sep 17, 2021

   Government-wide climate-related financial risk strategy due

6. Sep 1, 2021

   Proposed ERISA rule on financial factors in plan investments (earliest possible; 'by September 2021')

Key directives

• Develop government-wide climate-related financial risk strategy within 120 days
• FSOC to assess climate risks to financial stability and issue report within 180 days
• Federal Insurance Office to assess climate issues in insurance supervision
• Office of Financial Research to assist in data collection and research
• Labor Secretary to identify ERISA actions and consider proposed rule by September 2021
• Labor Secretary to report on pension actions within 180 days
• OMB and NEC to develop recommendations for National Climate Task Force on federal lending
• Federal Acquisition Regulatory Council to consider amending FAR for supplier disclosure and procurement preferences
• Agriculture, HUD, and VA Secretaries to consider climate risk in underwriting standards
• Agency heads to submit procurement integration actions as part of Climate Action Plans
• OMB to develop methodologies for climate risk in budget projections and publish annual assessments
• Reinstate Executive Order 13690 (Federal Flood Risk Management Standard)

Who is ordered

• Director of the National Economic Council · EOP
• National Climate Advisor · EOP
• Secretary of the Treasury · Treasury
• Director of OMB · Office of Management and Budget
• Secretary of Labor · Department of Labor
• Secretary of Agriculture · Department of Agriculture
• Secretary of Housing and Urban Development · Department of Housing and Urban Development
• Secretary of Veterans Affairs · Department of Veterans Affairs
• Chair of the Council on Environmental Quality · CEQ
• Chair of the Council of Economic Advisers · CEA
• Federal Chief Sustainability Officer · CEQ
• agency heads

Prior policyRollback

• rescindExecutive Order 13807 of August 15, 2017 (Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects)
• reinstateExecutive Order 13690 of January 30, 2015 (Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input)
• other'Financial Factors in Selecting Plan Investments,' 85 Fed. Reg. 72846 (November 13, 2020)
• other'Fiduciary Duties Regarding Proxy Voting and Shareholder Rights,' 85 Fed. Reg. 81658 (December 16, 2020)

Related orders

• referencesEO 13707
• referencesEO 13985
• implementsEO 14008
• referencesEO 13690
• revokesEO 13807

What to expect

Risks & tensions

• Subject to appropriations availability may limit implementation
• ERISA fiduciary duty changes could face legal challenges from industry groups
• FAR amendments for supplier disclosure may increase compliance costs for federal contractors
• Social cost of greenhouse gas emissions in procurement may be contested
• Vague: 'consider' language in Sections 3(b), 4(b), 5(b), 5(c) reduces binding force
• Reinstatement of FFRMS may conflict with infrastructure permitting efficiency goals
• Potential tension between climate risk mitigation and near-term economic competitiveness concerns