Biden orders reversal of Trump’s anti-ESG measures

The executive order calls for regulators to directly address climate change risks.

May 28, 2021

US President Joe Biden has issued an executive order calling for federal agencies and financial regulators to “address the serious threat that the climate crisis poses” to the country’s economy.

The order includes a formal instruction for the Department of Labor to “suspend, revise or rescind” rules affecting proxy voting and ESG investing.

Reflecting the president’s focus on climate in his first few months in office, the White House wants the federal government to mitigate risks to public and private financial assets.

Last week’s order compels regulators – including the Financial Stability Oversight Council, the Securities and Exchange Commission, and the Office for the Comptroller of the Currency – to assess climate impacts on the US financial system.

Requirements include a report from the Treasury – to be issued within the next six months – outlining how “identified climate-related financial risks can be mitigated, including through new or revised regulatory standards as appropriate”.

Labor Secretary Marty Walsh and his department have been instructed to explore how retirement savings can be protected from the effects of climate change.

Walsh’s department should also consider publishing proposals to “suspend, revise or rescind” rules brought in under the Trump administration that had negatively affected proxy voting and ESG investment considerations, President Biden’s executive order stated.

The Department of Labor had already pledged not to enforce the proxy voting measures, which were enacted in December 2020 in the last weeks of Donald Trump’s presidency. Walsh stated his support for reversing the move when he was nominated for his position earlier this year.

Since winning November’s election, President Biden and his administration have been attempting to restore the US’s place as a leader on climate issues on the world stage. The president has described the 2020s as a “decisive decade”. The US has pledged to cut carbon emissions by 50-52% below 2005 levels by the year 2030. Other countries, including Canada, Japan, and South Korea, have all recently made similar pledges on carbon and greenhouse gas emissions.

Last Updated: 28 May 2021