Climate-Related Financial Risk (E.O. 14030)

Summary

Creates a government-wide plan to find, lessen, and report financial risks from climate change to protect the U.S. economy and people's savings.

What problem does this solve?

Climate change threatens the economy, people's savings, and companies, but these dangers are not being properly measured. This order directs the government to create a strategy to identify these risks and protect federal money and retirement funds.

What does this order do?

Creates a government-wide climate risk strategy

Directs top economic and climate advisors to develop a plan within 120 days to measure, reduce, and report on climate-related financial risks across the federal government.

Requires financial regulators to assess climate risk

Tasks the Financial Stability Oversight Council with reporting on risks to the U.S. financial system and recommending new rules for companies to disclose their climate-related dangers.

Protects retirement savings and pensions

Directs the Secretary of Labor to find ways to protect American workers' retirement funds from climate-related financial risks and to review previous rules on investment decisions.

Adds climate rules for federal suppliers

Considers changing federal purchasing rules to require major government suppliers to report their greenhouse gas emissions and set goals to reduce them.

Reinstates federal flood protection standard

Brings back Executive Order 13690, which requires federal projects to be built to better withstand future flood risks, after it was previously cancelled.

Includes climate risk in the federal budget

Requires the President's Budget to identify and measure the federal government's financial exposure to climate change, such as costs from disasters or lost tax money.

Who does this affect?

Federal agencies
Financial institutions
Federal government contractors

What is the real world impact?

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Protects the U.S. economy from climate instability

Aims to make the financial system more stable by forcing government and businesses to account for the real costs and dangers of climate change, like extreme weather and the shift to clean energy.

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Encourages private companies to adopt greener practices

By requiring companies that work with the government to disclose their climate risks and emissions, the order pushes the private sector to reduce its carbon footprint to remain competitive for federal contracts.

When does this start?

This order took effect on May 20, 2021, and created several deadlines for government agencies to complete reports and develop new strategies.

Government-wide climate risk strategy

A comprehensive strategy must be developed within 120 days of the order (by September 17, 2021).

Financial Stability Oversight Council report

The FSOC must report to the President on climate risk to the financial system within 180 days of the order (by November 16, 2021).

Report on protecting pensions

The Secretary of Labor must report on actions taken to protect retirement savings from climate risk within 180 days of the order (by November 16, 2021).

Review of investment rules

The Secretary of Labor was instructed to consider publishing a proposed rule to change investment guidelines by September 2021.