Climate-Related Financial Risk
Federal Government Ordered to Address Climate-Related Financial Risks
What it does
Agencies must develop and implement a government-wide strategy to measure, mitigate, and disclose climate-related financial risks and integrate those risks into financial management.
Real-world impact
- Could lead to new disclosure requirements for companies doing business with the government.
- Prompts reviews of insurance oversight that could affect coverage in vulnerable regions.
- May change how retirement plans consider climate risk, affecting workers' savings.
Topics
Summary
This order directs the federal government to identify, measure, and reduce financial risks caused by climate change. It requires a government-wide strategy on climate-related financial risk, asks financial regulators to assess system-wide risks, directs reviews to protect workers' retirement savings, and seeks changes to federal lending, procurement, and budgeting to account for climate risks.
Agencies, insurers, federal lenders, and major suppliers are affected. The goal is to protect savings, strengthen the financial system, and steer investments toward a low-carbon economy while addressing impacts on disadvantaged communities.
Questions, answered
Ask questions about this executive order and its implications. Try:
- “What agencies are affected by this order?”
- “How does this order change existing policy?”
- “What are the practical implications of this order?”