The White House issued a 40-page report yesterday titled, “A Roadmap to Build a Climate-Resilient Economy.” It lays out, in broad terms, the Biden administration’s view that the health of the U.S. economy is intrinsically linked to climate change and that climate change poses a systemic risk to both the economy and the financial system. The report argues that the federal government has an important role to play in setting a floor for voluntary, regulatory and public management action to protect the country’s fiscal well-being. In taking this action, the government will be guided by five primary principles: safeguarding the financial system; protecting the government’s fiscal health; protecting vulnerable and disadvantaged communities; mobilizing public and private financing for decarbonization; and demonstrating global leadership.
According to the report, the United States is driven to act urgently for three reasons: the most effective risk strategy is investing in decarbonization; climate change is already having an effect on the economy and poses a systemic risk to the financial system; and the potential for irreversible damage due to climate change demands a precautionary approach. The report was issued prior to U.S. engagement at the upcoming United Nations Climate Change Conference beginning Oct. 31 in Scotland. A report from the Financial Stability Oversight Council focused more directly on the regulatory actions impacting the banking and financial sectors is expected next week.