Biden’s 2021 Climate-Resilient Economy Roadmap Unveiled: Key Initiatives and Impacts
Explore the comprehensive 2021 roadmap released by the Biden administration outlining federal strategies to build a climate-resilient economy, safeguard financial health, and address climate-related risks across sectors.
‘Biden’s comprehensive government-wide strategy to tackle the climate crisis’
On October 14, 2021, the Biden administration published a detailed 40-page roadmap titled “A Roadmap to Build a Climate-Resilient Economy.” This plan, developed under Executive Order 14030 signed in May 2021, outlines coordinated federal actions to address climate change and its economic impacts.
The accompanying fact sheet highlights that in 2021 alone, extreme weather events disrupted the U.S. economy and affected one in three Americans, imposing significant costs on families nationwide.
Key Highlights
- Comprehensive initiatives spanning multiple federal agencies and departments.
- Integration of climate considerations into federal budgeting and procurement processes.
- Enhanced disclosure requirements for public companies, investment strategies, and lending practices.
Climate Change as a Systemic Economic Threat
Over the past five years, extreme weather has inflicted more than $600 billion in physical and economic damages across the U.S. Climate risks embedded in retirement plans have already resulted in billions of dollars lost by American retirees. The roadmap emphasizes that climate change represents a systemic threat to the nation’s economy and financial stability, necessitating decisive mitigation efforts.
Notably, the plan addresses climate-induced wildfires and disruptions to both international and domestic supply chains.
Safeguarding Americans' Financial Well-being
The federal government aims to directly confront climate costs to protect workers’ savings, stimulate the creation of well-paying union jobs, and sustain long-term economic prosperity. The roadmap underscores that protecting household finances, advancing clean energy deployment, and fostering inclusive economic growth are interconnected priorities.
Strengthening Financial System Resilience
To enhance the U.S. financial system’s capacity to manage climate-related risks, three key initiatives are underway:
1. The Financial Stability Oversight Council (FSOC) is preparing a report to guide financial regulators in developing tools to mitigate climate-related financial risks.
2. The Treasury Department’s Federal Insurance Office (FIO) is evaluating climate risks within the insurance sector, focusing on coverage availability and affordability in high-risk and underserved communities.
3. The Securities and Exchange Commission (SEC) is crafting new disclosure regulations to provide investors with clearer insights into climate-related risks and opportunities affecting their investments.
Protecting Retirement Savings and Investments
On October 13, 2021, the Department of Labor proposed a rule to remove obstacles for fiduciaries to consider climate change and ESG factors when selecting investments and exercising shareholder rights. Additionally, the Department is assessing climate risks to the Thrift Savings Plan (TSP), the largest federal retirement plan covering nearly 6.5 million employees.
Advancing Climate-Conscious Federal Procurement
As the world’s largest purchaser of goods and services, the U.S. federal government spent over $650 billion in fiscal year 2020. New procurement policies will require agencies to factor in suppliers’ greenhouse gas emissions, favoring bids from companies with lower emissions and enhancing greenhouse gas disclosure and science-based targets in contracting.
Integrating Climate Risks in Federal Budgeting and Financial Management
The Office of Management and Budget (OMB), federal agencies, and the Federal Accounting Standards Advisory Board (FASAB) are developing climate risk assessments and disclosure mandates. The President’s fiscal year 2023 budget will include evaluations of the federal government’s climate risk exposure and its implications for long-term budget planning.
Adapting Federal Lending and Underwriting Practices
Departments including Housing and Urban Development (HUD), Veterans Affairs (VA), Agriculture (USDA), and Treasury are revising underwriting and lending standards to better address climate-related financial risks, while prioritizing the safety of communities most vulnerable to climate impacts.
Building Resilient Infrastructure and Communities
The Federal Emergency Management Agency (FEMA) is updating the National Flood Insurance Program (NFIP) standards. Multiple federal agencies are collaborating to enhance resilience against extreme weather events such as heatwaves, droughts, storms, and wildfires.
The National Oceanic and Atmospheric Administration (NOAA) has launched new tools to improve public access to federal climate information. Over 20 agencies have released climate adaptation and resilience plans to protect federal investments and taxpayer funds from climate-related costs.
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