Treasury of the United States Takes Actions to Counteract Climate Warming

The Department of the Treasury (Treasury) has announced a Climate Action Plan (CAP) on October 7, 2021, aiming to increase its resiliency in the face of climate change. The plan consists of five priority action areas, as Treasury Secretary Janet Yellen stated that climate change is a present challenge.

The first priority action area is to rebuild programs and capabilities that might have atrophied or stagnated. This includes revitalising existing initiatives and establishing new ones to address climate change impacts and vulnerabilities across the range of Treasury operations.

The second priority action area is to address climate change impacts and vulnerabilities directly. This involves assessing the risks and opportunities associated with climate change for the Treasury's operations and developing strategies to mitigate these risks while seizing opportunities for growth.

The third priority action area is to ensure a climate-focused approach to managing Treasury's real property portfolio footprint. This includes implementing energy-efficient measures, reducing greenhouse gas emissions, and promoting sustainable buildings.

The fourth priority action area is to enable procurement management to fully consider climate change realities. This means incorporating climate considerations into the procurement process, such as favouring products and services that have lower carbon footprints.

The fifth priority action area is to provide, measure, and account for a financial investment approach appropriate to the Treasury's climate objectives. This includes developing metrics to track progress towards the Treasury's climate goals and making strategic investments in climate-friendly initiatives.

Meanwhile, the Office of the Comptroller of the Currency (OCC) is also focusing on climate risk management. Acting Comptroller Michael Hsu stated that the OCC is working with interagency peers to develop climate risk management guidance for large banks. President Biden's nomination of Cornell University law professor Saule Omarova as comptroller of the currency on September 23, 2021, is expected to emphasize continued oversight on climate risks and environmental impact in banking.

Environmental groups have applauded Omarova's nomination, anticipating that she will make combating climate risk a priority. Omarova, who has criticized big banking, is likely to carry out this agenda regarding climate risk management if approved.

The CAP was released in accordance with Executive Order 14008, which aims to promote the nation's economy, environmental protection, and national security by addressing the impacts of climate change. The Treasury's Climate Action Plan does not propose specific regulations for financial institutions, but it reflects the Treasury's climate change priorities.

While the U.S. financial regulatory authorities under the Biden administration have pursued initiatives linked to promoting competition and green investment, specific direct regulatory actions targeting environmental pollution by banks have been limited or less visible. Nonetheless, the nomination of Saule Omarova as the overseer of credit institutions is expected to emphasize continued oversight on climate risks and environmental impact in banking.