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Financial Services Law Insights and Observations

Biden outlines actions to mitigate climate-related financial risks

Federal Issues Climate-Related Financial Risks Biden Risk Management SEC

Federal Issues

On October 15, the Biden administration issued a Fact Sheet outlining actions for building economic resilience to the impact of climate change. Among other things, the Fact Sheet is a “comprehensive, government-wide strategy to measure, disclose, manage and mitigate the systemic risks climate change poses to American families, businesses, and the economy,” and expands upon recent actions taken by the administration. The administration’s “whole-of-government strategy” discusses six pillars to achieve the goals outlined in Biden’s May 2021 Executive Order on Climate-Related Financial Risks (covered by InfoBytes here). One of the pillars—promoting the resilience of the U.S. financial system to climate-related financial risks—refers to recently issued SEC guidance stating that companies may be required to include information concerning climate-change risks and opportunities in “disclosures related to a company’s description of business, legal proceedings, risk factors, and management’s discussion and analysis of financial condition and results of operations.” (Covered by InfoBytes here.) The other five pillars are: (i) protecting life savings and pensions from climate-related financial risk; (ii) using federal procurement to address climate-related financial risk; (iii) incorporating climate-related financial risk into federal financial management and budgeting; (iv) incorporating climate-related financial risk into federal lending and underwriting; and (v) building resilient infrastructure and communities.

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