President Joe Biden will order US financial firms to disclose the climate-change risks of their investments, adding to the wave of global regulation on climate and investment.
The plan was announced on 7 April by US climate envoy John Kerry. Speaking at an IMF event on climate change, Kerry said the rules would be introduced through a presidential executive order, but gave no further details or a timetable for the plan.
Kerry said the move would lead to a significant shift in investment. “Suddenly people are going to be making evaluations considering long-term risk to the investment based on the climate crisis,” he said.
President Joe Biden confirmed in a budget announcement on 9 April that his administration planned to add $14bn to funds dedicated to addressing climate change, through renewable technology innovation and other Energy Department initiatives, according to Bloomberg.
The rules alluded to by Kerry would bring the US into closer alignment with the aims of the international Task Force on Climate-related Financial Disclosure and with the European Union. The EU has already introduced rules on climate change disclosures under its Sustainable Finance Disclosure Regulation (SFDR).
The SFDR rules took effect in Europe in March this year with investment firms required to make policy statements and disclosures in a phased implementation over the coming two years.
Any US plan to match the EU approach would reflect the stark shift in attitude and policy towards climate change under President Biden. One of Biden’s earliest decisions as president was to rejoin the international Paris Climate Accord abandoned by his predecessor, Donald Trump.
While US policymakers have until now lagged other jurisdictions, American investors have already voiced their concerns over climate change.
Larry Fink, chairman and chief executive of BlackRock, used his annual letter to investor last year to announce that climate issues would become central to its investment strategy, stating that climate issues would lead to a “fundamental reshaping of finance”.
IMF managing director Kristalina Georgieva, speaking alongside Kerry at this week’s event, announced the IMF’s own initiative – a Climate Change Indicators Dashboard. The dashboard will draw together data on greenhouse gas emissions, trade in environmental goods, green finance, and government policies.
Georgieva also warned that IMF analysis indicated that climate-related risks were not adequately reflected in equity values, posing a real risk of economic losses for investors.Last Updated: 12 April 2021