Biden Administration issues Roadmap for Climate adaptation economy

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Core principles for dealing with climate-related financial risks

The current system of assessing economic and financial risks has enabled the United States economy to grow and prosper, achieving technological progress and improving the quality of life. However, rapidly accumulating risks are leading the United States into an unpredictable future, so the US government must work with state, local and tribal governments, independent regulators, advocacy organizations, trade unions, financial institutions and companies to blaze a new path. The US government should follow the following climate risk accountability framework principles in dealing with climate-related financial risks:

(1) mobilize public and private funds to support the transition of the US economy to net zero. In order to achieve the goal of net zero emissions by 2050, the United States must invest heavily in low-carbon infrastructure, deploy renewable clean energy solutions faster, invest in advanced transmission and distribution systems, and promote decarbonization in the transport sector. phase out fossil fuel assets. This will require a significant increase in the deployment of public and private capital, and these new technologies will achieve further emissions reductions in the coming decades.

(2) protect vulnerable communities. Make the necessary investment in the resilience and financial stability of vulnerable communities, accounting for at least 40 per cent of the federal government's overall benefits on climate infrastructure and clean energy, ensuring that vulnerable communities are protected from the effects of climate change, can equitably share the benefits of clean energy and climate infrastructure, and will not be harmed by the risks of climate change. In addition, the federal government must stimulate new net-zero industries and revive the economy in already battered communities.

(3) to protect the federal government and its service communities from financial risks. Since 2013, the Federal Government Accountability Office (GAO) has identified climate change as a major financial risk for the federal government. When disasters occur, many state, local and tribal governments need assistance from the federal government. At the same time, the federal government will play an important role in the economic development of the United States by establishing underwriting standards, loan terms, insurance requirements, asset management and service procedures related to federal loan policies and programs. Therefore, the federal government needs to continue to work with state, local and tribal governments that make key development decisions to support and adopt more flexible implementation standards to improve disaster response capacity while promoting economic development.

(4) protect the American financial system. The smooth operation of US financial markets and institutions is facing systemic risks brought by climate change, which has threatened households, businesses, infrastructure, supply chain, food supply and human health and safety. In addition, climate change could lead to economic and financial tightening in all parts of the United States. Therefore, the US financial system must be protected from climate-related financial risks by requiring financial institutions to be responsible for measuring, disclosing, managing and mitigating climate-related financial risks.

(v) demonstrate global leadership by participating in ongoing international efforts to address climate-related financial risks. The United States is participating in international forums and institutions involved in climate-related financial risk management to improve available information and methods of assessing and monitoring such risks. The United States also recently joined the Treasury Secretary's Alliance for Climate Action, which brings together financial and economic policy makers from more than 60 countries.

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The working route to deal with climate-related financial risks

Based on the climate risk accountability framework and core principles, the government has developed six major work lines to measure, disclose, manage and mitigate climate-related financial risks:

(1) to improve the ability of the US financial system to cope with climate-related financial risks. 1 the Financial Stability Supervisory Board (FSOC) will soon release a report that will begin the first step in the process of using US financial regulators to develop capacity and analytical tools to mitigate climate-related financial risks. 2 the Federal Insurance Office of the United States Treasury Department has launched a process to address climate-related risks in the insurance industry, focusing on assessing the practicality and affordability of insurance coverage for underserved communities in high-risk areas. 3 the Securities and Exchange Commission (SEC) recommends a mandatory disclosure rule for public issuers to give investors a better understanding of the significant risks and opportunities posed by climate change to their investments. The rule is expected to be introduced in the coming months.

(II) protect lifetime savings and pensions from climate-related financial risks. The U.S. Department of Labor (DOL) is proposing a rule to protect workers' hard-earned life savings by taking into account climate change and other environmental, social and governance factors. 2DOL also tries to protect nearly 6.5 million participants in the world's largest thrift savings scheme, or TSP, by analyzing how climate-related risk factors can be further taken into account.

(3) using federal procurement to address climate-related financial risks. 1 the Office of Management and Budget (OMB) announced that the Federal Procurement Management Board (FARC) will begin to explore procedures for amending federal procurement regulations, requiring agencies to take into account suppliers' greenhouse gas emissions when making procurement decisions, and give priority to companies with lower greenhouse gas emissions. 2FARC is also actively exploring amendments to federal procurement regulations to improve disclosure of greenhouse gas emissions under federal contracts and to set science-based greenhouse gas emissions targets.

(IV) integrate climate-related financial risks into federal financial management and budgeting. 1OMB, federal agencies and the Federal Accounting Standards Advisory Board (FASAB) are taking steps to develop strong climate-related risk assessment and disclosure requirements for federal agencies. 2 the presidential budget for fiscal year 2023, to be developed in 2022, will include an assessment and supplementary assessment of the federal government's climate risk and its impact on the long-term budget outlook. 3 agencies will further integrate climate-related financial risks into budgets and institutional financial reporting, enhance transparency and promote accountability.

(5) incorporate climate-related financial risks into federal loans and underwriting. 1 the U.S. Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA), the Department of Agriculture (USDA) and the Treasury Department (DOT) are all working to improve their federal guarantee and loan program standards to better address climate-related financial risks in their loan portfolios. 2HUD is working to address the challenges posed by climate change for American households, starting with figuring out how to incorporate climate-related issues into single-family mortgages. 3VA is assessing the impact of climate change on its housing loan benefit program. 4USDA is working to address climate risk from a single-family guaranteed loan program.

(VI) Building resilient infrastructure and communities. 1 the Federal Emergency Management Agency (FEMA) is seeking the views of the public and stakeholders on floodplain management standards to revise standards that have not been formally updated since 1976 to make communities more fle