On May 20, 2021, President Biden signed an executive order on climate-related financial risk that directs financial regulators to ensure appropriate measurement and mitigation of such risks. According to a recent article by the ABA Journal, the treasury secretary and Financial Stability Oversight Council will work together to assess the climate-related financial risk to the financial stability of the federal government and the U.S. financial system. The FSOC member agencies will facilitate sharing climate-related risk information to other areas of the federal government on an as-needed basis.
The Treasury will issue a report including recommendations on mitigating climate-related financial risks within 180 days of the executive order. Financial regulatory agencies should incorporate climate-related financial risk into their policies and programs and revise regulatory standards as appropriate.
This action by the Biden administration comes after officials from regulatory bodies have indicated their intent to focus on climate-related financial risks. Click here to read the full article.