Executive Order 14030-Climate-Related Financial Risk

On May 20, 2021, President Biden signed Executive Order 14030, directing federal agencies to assess and address climate-related financial risk. The order recognized that the physical risks of climate change — including extreme weather events, sea level rise, and chronic heat — as well as the economic transition risks associated with the shift to a low-carbon economy pose material financial risks to the U.S. financial system, federal lending programs, and the retirement savings of American workers. It directed agencies to take coordinated action to measure and mitigate these risks.

The order directed the Secretary of the Treasury, as chair of the Financial Stability Oversight Council, to produce a report on climate-related financial risk to the stability of the U.S. financial system. It directed financial regulators including the Securities and Exchange Commission to consider new rules requiring climate risk disclosure by publicly traded companies. The order also directed federal agencies to consider climate risk in their lending and insurance programs, and instructed the Department of Labor to consider whether pension plan administrators need clearer guidance on their obligation to consider climate risk in managing retirement assets.

This executive order reflected the growing consensus among financial regulators, institutional investors, and central banks worldwide that climate change poses material risks to financial stability and that better measurement, disclosure, and management of these risks is essential. It represented the Biden administration's effort to integrate climate risk into the core of U.S. financial regulatory and policy frameworks.

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