Coalition welcomes EO as important step for the climate finance movement, pushes administration to deliver by COP26 in November
Today, President Biden issued a new broad-ranging Executive Order (EO) titled “Climate-Related Financial Risk,” that among other things, requires National Climate Advisor Gina McCarthy and Director of the National Economic Council Brian Deese to develop, within 120 days, “a comprehensive government-wide climate-risk strategy to identify and disclose climate-related financial risk to government programs, assets, and liabilities. This strategy will identify the public and private financing needed to reach economy wide net-zero emissions by 2050.” Additionally, the order calls for Treasury Secretary Janet Yellen to “consider issuing a report, within 180 days, on actions the Financial Stability Oversight Council (FSOC) recommends to reduce risks to financial stability, including plans that member agencies are taking to improve climate-related disclosures and other sources of data, and to incorporate climate-related financial risk into regulatory and supervisory practices.”
The Stop the Money Pipeline Coalition welcomes the Executive Order as an important step for the climate finance movement and urges the administration to deliver reports and action plans by the United Nations climate change conference (COP26) in Glasgow, Scotland on November 1, 2021. Under the Executive Order, the Administration’s strategy to “identify the public and private financing needed to reach economy-wide net-zero emissions by 2050” will be released well ahead of the Glasgow climate talks. On the other hand, the deadline for FSOC to release their report on regulations regarding climate-related financial risk is well after COP26. The outcomes of COP26—including public and private sector commitments—will go a long way to determining our ability to combat the climate crisis.
On Tuesday, the International Energy Association published a roadmap for the world to keep global warming below 1.5°C. One of the more striking findings of the report affirmed, “There is no need for investment in new fossil fuel supply in our net zero pathway.” The Stop the Money Pipeline coalition has called for specific deliverables that departments and agencies subject to the Executive Order can provide to ensure that all U.S. financial institutions are firmly on a path to real zero greenhouse gas emissions before COP26. The coalition has also issued more general demands for the Biden Administration in advance of the Glasgow climate talks in November.
U.S. banks, insurance companies, and asset managers are the world’s largest financiers of the corporations driving climate chaos. In the five years since the Paris Agreement, the four largest U.S. banks were the world’s top four funders of fossil fuels, collectively financing $976 billion, which comprised more than 25% of the total fossil fuel funding from the world’s 60 biggest banks. Last month, polling released by Data for Progress showed that U.S. voters overwhelmingly support the federal government taking strong action to curb Wall Street’s effect on the climate crisis in order to prevent economic crises driven by the financing of fossil fuels and other risky, high-emitting sectors.
Members of the Stop the Money Pipeline coalition released the following statements in response to President Biden’s new Executive Order:
Tracey Lewis, Senior Climate Finance Policy Analyst, 350.org: “This week’s IEA report underlined the writing that’s been on the wall: fossil fuels are an existential risk to our climate, communities, and economy. This executive order mobilizes the entire finance sector to stop funding dirty fossil fuels and build back fossil free. Instead of using public money to bail-out fossil fuel corporations, the Federal Reserve must act on its key role in tackling the climate crisis, and most importantly, President Biden must appoint a true climate leader who will reimagine the Fed in its role as the Peoples’ Bank.”
David Arkush, Climate Program Managing Director, Public Citizen: “With this order, President Biden is sending a strong signal that financial regulators should take on climate-related risk, including the risk that financial institutions create when they finance emissions that exceed science-based climate targets. The order gives the regulators longer than they need to report on their actions and draft plans on climate, particularly at a time when some, like the Fed, don’t appear to take the urgency of climate threats seriously enough. But make no mistake, the order is a strong and unprecedented step forward. We will be calling on the regulators to act on it quickly.”
Moira Birss, Climate and Finance Director, Amazon Watch: “I applaud the administration for heeding the alarm bells raised by climate advocates and frontline communities about the U.S. financial industry’s outsized contributions to the climate crisis and the resulting impacts on our economy, financial system, and communities. However, the administration should clarify that any use of ‘net zero’ frameworks requires no expansion of fossil fuels and other top drivers of climate change; neither climate science nor an environmental justice approach leave room for false solutions like offsets, which are little more than an excuse for continued investments in the very industries causing climate change and disproportionately harming communities of color.”
Ben Cushing, Financial Advocacy Campaign Manager, Sierra Club: “It is promising to see President Biden recognize the enormous systemic risks of the climate crisis and call for sweeping action to protect the U.S. economy, the financial system, and the planet. The Biden administration affirmed today it recognizes that corporate disclosure and voluntary commitments alone are not sufficient for addressing systemic climate risks and that regulators must act. The IEA affirmed this week that in order to achieve President Biden’s goal of net-zero emissions before 2050, there can be no financing of new fossil fuels starting now — but U.S. financial firms continue to be world’s largest financiers of fossil fuels and climate destruction. Regulators have the tools to rein in these risky, dirty financing activities and safeguard our communities, and they need to use those tools now. These actions have the strong backing of the American people, who support a bold climate agenda and action to prevent another financial crash caused by Wall Street’s short-sighted gambles.”
Jeff Hauser, Executive Director, Revolving Door Project: “President Biden has taken a necessary step to infuse climate action into the financial system. The breadth of this order illustrates why a wide array of personnel must be climate leaders while also underscoring the need to ensure the post-Trump federal government has the experience and capacity to carry out this ambitious order.”
Richard Brooks, Climate Finance Director, Stand.earth: “We need to see banks, insurers and big public asset managers like pension funds step up their game in terms of getting out of risky fossil fuel companies and accelerating their climate risk reduction plans. Today is a supportive step in the right direction, but more needs to be done to ensure these institutions are part of the climate solution, and not dumping more fuel on the climate fire with hundreds of billions continuing to be invested into coal, oil and gas companies and expansion projects.”
Dallas Goldtooth, Keep It In The Ground Campaign Organizer, Indigenous Environmental Network: “While this action by President Biden is commendable in spirit, we are worried that regulators and officials will use the umbrella term of ‘net-zero’ to allow false solutions, such as offsets, be used as examples of minimizing risk, rather than stopping the actual expansion of fossil fuels. We further encourage all federal parties involved to take deep consideration on how the impacts of Indigenous Rights, and the violations of such by fossil fuel companies, contribute to the financial risks assumed by the federal government and the taxpayer monies.”
Erika Thi Patterson, Climate and Environmental Justice Campaign Director, Action Center on Race and the Economy: “Wall Street has long been extracting from Black, Brown, and Indigenous communities and financing the fossil fuel corporations driving our climate crisis. It’s a critical step for the Biden administration to recognize the enormous role financial firms play in exacerbating climate change, but we need the executive order to make clear that ‘net zero’ encompasses an end to the expansion of all fossil fuel infrastructure. A net zero scenario that relies on carbon dioxide storage, carbon capture, or other false, unproven, and unjust solutions will only lead to massive amounts of carbon being transported through frontline communities already shouldering the toxic burden of fossil fuels.”
Jason Opeña Disterhoft, Climate & Energy Senior Campaigner, Rainforest Action Network: “President Biden’s executive order is a tribute to the work of the climate finance movement in highlighting Wall Street’s role in fueling climate change, and the administration deserves credit for answering the call. To mitigate climate risk and its drivers, stopping the money pipeline is a top priority. Today should mark a turning point in efforts to phase out the financing activities that are threatening all of our futures, and the climate movement will be watching implementation of this order to ensure it fulfills its potential.”
Steven Feit, Senior Attorney, Center for International Environmental Law: “The best and surest way to combat climate-related risks is to combat the climate crisis itself, beginning with its main drivers: fossil fuels and deforestation. The biggest climate-related financial risk hiding in plain sight is continued public and private investment in the fossil fuel industry. With today’s Executive Order, President Biden has acknowledged that the time has come for the entire financial system, on which we all depend, to treat climate change like the material financial risk that it is. The test will be whether the administration translates that recognition into regulation, and compels financial institutions to align their actions with a safe-climate, fossil-free future.”
Jamal Raad, Executive Director, Evergreen Action: “Today’s order begins the work of building a better financial system. It is a starting gun from the White House to Treasury, the SEC, and others to get moving on America’s work to not just monitor and disclose the risks that climate change poses to our financial well-being, but actually mitigate those risks. The forthcoming agency actions––including the FSOC report led by Treasury Secretary Janet Yellen––should make clear both how to protect the financial system against climate risk, and also how to prevent the financial system from continuing to increase the magnitude of the climate crisis. The Biden administration must use every tool at its disposal to build a financial system that is better for working people and more resilient to the threat of climate disruption—and we look forward to further action after today’s historic step.”
Doug Norlen, Economic Policy Program Director, Friends of the Earth US: “Biden’s Executive Order is a step forward in many ways, and its implementation must apply to U.S. agencies financing fossil fuel projects abroad, including the U.S. Export-Import Bank, Development Finance Corporation, and our federal contributions to Multilateral Development Banks. These agencies worsen climate risks globally by providing billions of dollars annually in financing for fossil fuels and deforestation projects, and that must end if the Executive Order is to live up to its promise. We already know how to mitigate climate risks: stop financing fossils and deforestation, quickly and justly.”
Allie Lindstrom, Research Coordinator, Future Coalition: The Biden Administration’s Executive Order on Climate-Related Financial Risk highlights the urgent need for climate action across all levels of government, and the extensive role of financial institutions in this crisis. Commitments to Net Zero by 2050 from banks fall short of the immediate action needed; ending fossil fuel expansion, adopting “No Fossil Fuel” phase-out policies, prohibiting funding of deforestation, and honoring Indigenous sovereignty. The IEA’s report this week aligns with organizers’ and frontline communities’ call to stop the expansion of the fossil fuel industry. Youth organizers are calling on President Biden for bold leadership required to preserve and defend the planet from Wall Street’s risky fossil fuel investments.
Collin Rees, Senior Campaigner, Oil Change International: “Big banks continue to drive the climate crisis and perpetuate environmental injustice, pumping trillions of dollars into deadly fossil fuel projects. President Biden’s executive order is a welcome change from past failures to regulate the financial industry, and a clear sign that the tides are turning. The legacy of Biden’s climate financial regulation and this executive order will hinge on choices yet to come — Secretary Yellen and the Biden team must work urgently to enact strong regulations ahead of this year’s crucial COP26 climate talks in Glasgow, and the Biden administration must make it crystal-clear that ‘net zero’ means no more fossil fuel expansion and no false solutions.”
The Stop the Money Pipeline Coalition is a coalition of more than 160 organizations working to hold the financial backers of climate chaos accountable.