Rejecting the Biden administration’s “plans to make plans” and demanding decisive climate action, a coalition of 160 groups on Thursday called on President Joe Biden to act with more urgency to ensure all U.S. banks and government agencies are on a firm path to fully divesting from fossil fuels ahead of the 2021 United Nations Climate Change Conference, taking place in Glasgow later this year.
The Stop the Money Pipeline issued a statement as President Joe Biden was expected to announce an executive order titled “Climate-Related Financial Risk,” which will direct administration officials to develop a strategy to measure, report, and reduce climate risks facing federal agencies as well as order regulatory bodies to review how they will oversee major industries and financial institutions when it comes to future impacts related to the planetary crisis.
“President Biden must ensure that before [the U.N. climate conference], all U.S. financial institutions are firmly on a path to real zero greenhouse gas emissions,” said the Stop the Money Pipeline coalition. “This will require that every regulatory agency and department is staffed by strong, pro-climate and environmental justice leaders who make eliminating climate risk a central part of their agendas.”
TODAY: @POTUS is expected to issue a new broad-ranging Executive Order (EO) titled “Climate-Related Financial Risk.”— Stop the Money Pipeline (@StopMoneyPipe) May 20, 2021
Read our Press Release and COP26 Glasgow Demands for the Administration at https://t.co/hzPJwQM8DW pic.twitter.com/PpaYtQrGF9
According to a Politico report on a draft of the executive order expected Thursday, Treasury Secretary Janet Yellen, who leads the Financial Stability Oversight Council (FSOC), will have 180 days to assess climate risks within the U.S. financial system and government agencies—meaning Yellen won’t be required to issue a report until after the U.N. conference (COP26).
The Stop the Money Pipeline noted that the executive order is being announced days after the International Energy Agency (IEA) released a bombshell report that calls on policymakers to transition to a net-zero energy system by 2050 and acknowledges that there is “no need for investment in new fossil fuel supply in our net-zero pathway.”
“It’s great that the Biden administration is catching up with frontline communities, climate advocates, and even the IEA in recognizing that investments in the industries causing climate change are a major loss for pocketbooks and the planet,” said Moira Birss, climate and finance director at Amazon Watch. “But plans to make plans in no way matches the urgency of the climate crisis; we need action from regulators now to stop the money pipeline to climate chaos.”
As the coalition said in a press statement, the four largest U.S. financial institutions—JPMorgan Chase, Citi, Wells Fargo, and Bank of America—have been the biggest funders of fossil fuel extraction projects since the Paris climate agreement was reached in 2015. The banks have poured $976 billion into greenhouse gas investments in the last five years.
Under the executive order, Yellen and the FSOC could take regulatory action to rein in banks and other private financial institutions that have failed to divest from fossil fuels—but under the timeline set by the Biden administration, that action won’t be taken until 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. U.S. banks, insurance companies, and asset managers are the world’s largest financiers of the corporations driving climate chaos,” said the Stop the Money Pipeline coalition.
350.org, part of the coalition, said the executive order “must mobilize the entire finance sector to build back fossil free and end fossil fuel finance.”
“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, including Biden appointing a real climate leader to reimagine the Fed in its role as the Peoples’ Bank,” said Tracey Lewis, senior climate finance policy analyst for the organization.
Instead of spending several months assessing the risks of continuing in fossil fuels, the coalition called on the Biden administration to:
- Address climate change as a central part of financial regulators’ missions, including ensuring that the Financial Stability Oversight Council and its member agencies begin work right away on climate plans, and that they are implementing the plans by COP 26;
- Ensure financial regulators immediately start collecting the data and doing the analysis necessary to integrate the climate crisis fully into financial regulation, and empower investors to invest their values;
- Instruct financial regulators to restrict and phase out finance for fossil fuels and deforestation;
- and direct the Treasury and the Federal Reserve to stop using emergency rescue and recovery programs to subsidize fossil fuels and deforestation and instead invest in a productive, just, clean recovery.
In addition to private Wall Street banks, public agencies are expected to be named in the executive order as entities that should assess climate risks. The Federal Retirement Thrift Investment Board, which oversees 6.2 million retirement accounts, will be called on to evaluate the risk of investing in fossil fuel securities, while the Departments of Agriculture and Housing will be asked to integrate climate-related financial risks, such as flooding risks, into their underwriting standards.
The coalition noted that Biden won the 2020 presidential election with the “strongest climate mandate in history,” pledging a $2 trillion investment in green job creation, sustainable infrastructure, and a transition to a power sector free from carbon pollution by 2035. Nearly seven in 10 Biden voters said before the election that the climate crisis was a “very important” to them when considering their vote.
“Fulfilling that mandate requires urgent action from his administration to stop supporting new fossil fuel projects and to phase-out public and private financing of fossil fuels,” said the coalition.
According to Jason Opeña Disterhoft, a senior campaigner with Rainforest Action Network, the coalition will be holding Biden’s order to a high standard.
“Wall Street includes the biggest set of fossil and deforestation bankers, insurers, and investors in the world,” he said. “It’s a central part of the U.S. carbon footprint, and the Biden administration must put it firmly on the path to zeroing out its climate impact. We’ll be judging President Biden’s executive order against that benchmark.”