Climate-Related Financial Risk, 27967-27971 [2021-11168]

Agencies

• Executive Office of the President

[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