White House says climate change poses a 'systemic risk' to the US economy
The warned that posed a systemic risk to the U.S. economy on Friday as it outlined plans for new rules that would force financial firms to address the risks of global warming. Its 40-page report detailed the administration's strategy to protect the financial, insurance and housing markets and the savings of American families. They include proposals for protections on savings and pension plans and making climate change a bigger consideration in federal budgeting and procurement. Taken together, they suggest how the the nation must prepare for the costs that families, investors and government will face because of climate change. And the report lays down a marker ahead of the United Nations Climate Change Conference which starts at the end of the month in Glasgow, Scotland. 'U.S. financial markets and institutions face systemic risks from climate change,' the report said. The report lays out steps for Wall Street that could change the mortgage process, stock market disclosures, retirement plans, federal procurement and government budgeting. It follows May's executive order by President Joe Biden that essentially calls on the government to analyze how the world's largest economy could be affected by extreme heat, flooding, storms, wildfires and the broader adjustments needed to address climate change. Gina McCarthy, the White House national climate adviser, told reporters that the measures were not about protecting the financial system but about safeguarding people and their pay checks. 'If this year has shown us anything, it's that climate change poses an ongoing urgent and systemic risk to our economy and to the lives and livelihoods of everyday Americans, and we must act now,' she said. A February storm in Texas led to widespread power outages, 210 deaths and severe property damage. Wildfires raged in Western states. The heat dome in the Pacific Northwest caused record temperatures in Seattle and Portland, Oregon. Hurricane Ida struck Louisiana in August and caused deadly flooding in the Northeast. The report said that local problems could undermine local financial institutions. 'Moreover, climate change may lead to economic and financial strains in regions of the country situations that do not threaten the stability of the whole system, but which can disrupt the ability of local banks, insurance companies, and other institutions to serve particular communities,' it said. 'These might include, for example, community banks and sector-focused regional banks. In fact, these threats are already playing out in some local insurance markets within regions of the United States affected by hurricanes and wildfires. Among the steps outlined is the government's Financial Stability Oversight Council developing the tools to identify and lessen climate-related risks to the economy. The Treasury Department plans to address the risks to the insurance sector and availability of coverage. The Securities and Exchange Commission is looking at mandatory disclosure rules about the opportunities and risks generated by climate change. The Labor Department on Wednesday proposed a rule for investment managers to factor environmental decisions into the choices made for pensions and retirement savings. The Office of Management and Budget announced the government will begin the process of asking federal agencies to consider greenhouse gas emissions from the companies providing supplies. Biden's budget proposal for fiscal 2023 will feature an assessment of climate risks. Federal agencies involved in lending and mortgages for homes are looking for the impact on the housing market, with the Department of Housing and Urban Development and its partners developing disclosures for homebuyers and flood and climate-related risks. The Department of Veterans Affairs will also look at risks for its home lending program. The Federal Emergency Management Agency is updating the standards for its National Flood Insurance Program, potentially revising guidelines that go back to 1976. 'We now do recognize that change is a systemic risk,' McCarthy said. 'We have to look fundamentally at the way the federal government does its job and how we look at the finance system and its stability.'