Daily Archives: July 17, 2021

President Issues Executive Order On Climate-Related Financial Risk

On May 20, 2021, President Biden signed an Executive Order with a goal of increasing disclosure of climate-related financial risk in both the public and private sectors. As a result, disclosure and reporting obligations regarding climate-related risks will likely increase. The Order called for a comprehensive consideration of climate change-related financial risks, and how they should be communicated to the public and investors.

The Order directs federal policymakers to develop a strategy for identifying and disclosing climate-related financial risk to government programs, assets, and liabilities, including identifying public/private financing needed to reach economy-wide, net-zero emissions by 2050 to limit further temperature rise per the Paris Climate Agreement.

The Order also requires the Financial Stability Oversight Council (FSOC) to assess climate-related financial risk to the federal government and overall U.S. financial system. The FSOC should discuss the necessity of greater climate-related disclosure by certain entities to mitigate risk to the stability of the financial system and new regulations for identifying and mitigating such risks.

The Order directs the Dept of Labor to identify regulatory actions to assess the threats that climate risk may have to savings and pension plans. This includes reconsidering rules that prohibit investment firms from considering environmental, social, and governance (ESG) factors in investment decisions related to workers’ pensions.

The Order also requests recommendations for incorporating climate-related financial risk into federal management and reporting, including potential new accounting standards for reporting of such risks. The Order also requests changes to rules that would require that major federal suppliers publicly disclose GHG emissions and climate-related financial risk and set reduction targets. Similarly, lending and grant agencies like Agriculture, Housing and Urban Development, and Veterans Affairs are to consider integrating such risk assessment into their lending policies and programs.

The Order also requests the federal government develop regulatory standards for misleading advertising and claims about climate change and sustainability (“greenwashing”) that may result in enforcement actions.

After signing the Executive Order, President Biden included in his FY 2022 budget to Congress $44.0 million in new funding to the Dept of Justice “to advance environmental justice, tackle climate change, and enhance environmental stability.”

Meanwhile, the Federal Reserve has established two committees to evaluate climate-related financial risk, examining how climate change affects individual banks.

Please note that this is not a legal analysis of the Executive Order. Consult with qualified legal professionals before pursuing actions or policies concerning this Executive Order. CCES has the technical experts to help you determine your status concerning GHG emissions and sustainability. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Consumer Tastes Are Changing To Eco-friendly

One item that will surely dictate how we address Climate Change and other environmental issues is public sentiment. If such sentiment at the ballot box and at the store favors environmentally-friendly candidates and products, the message will have gone out to politicians and companies and moves will be made to, for example, combat Climate Change. If the “same old” candidates win elections and products are purchased in stores, then no significant change will likely happen.

Consumers have been slowly prioritizing sustainability choices. In a 2019 Pricewaterhouse Cooper (PwC) Global Consumer Insights Survey, 35% of respondents said they chose sustainable products to help protect the environment and 41% said they avoided the use of plastic when they could. The COVID-19 pandemic has given people a lot of time to ponder and time home to absorb their environment. PwC’s June 2021 Global Consumer Pulse Survey concluded that a higher percentage, about half of all global consumers surveyed, say they’ve become even more eco-friendly in their choices. There are differences world-wide, as Asian and Middle Eastern consumers were said to be more eco-friendly in consumer behavior than those in other regions. In the US, it was about 15% of consumers surveyed who said they buy primarily from companies who are perceived to be supportive of the environment. In addition, younger consumers (under 32 years old) are more eco-friendly than other age groups.

Another recent study by Visual GPS and YouGov also indicates a shift during the pandemic, finding that 81% of people polled expect companies to be environmentally conscious in their advertising and communications, and 69% of respondents said they were doing everything possible to minimize their carbon footprint.

However, while eco-consumerism is clearly on the rise, the recent PwC survey showed that such consumers have not fully embraced sustainable shopping. A large number of consumers, while sympathetic to environmental concerns, still rank convenience and price as major factors in making decisions on products.

Is this a temporary increase in awareness and effort due to the pandemic or is eco-friendly consumerism here to stay? PwC suggests that it is here to stay. A growing number of companies are offering consumers a growing array of eco-friendly alternatives and sales data show they are performing well.

Such a rise in interest in such a short time and this unique appears to indicate that people spending more time at home gave them more time to think, learn, contemplate, and explore alternative life choices, such as greater proof of environmental friendliness in products purchased.

With the growing number and severity of incidents of extreme conditions cataloged and on the news in recent days (record breaking heat in the US Northwest, historic flooding in Europe), it is very possible that this trend toward eco-consumerism will only increase, resulting in companies accelerating their focus on innovative products and more sustainable practices to please consumers which will be good for their bottom line, too.

CCES has the technical experts to advise your company on determining your carbon footprint and other sustainability measurements and to help your company design and implement a sustainability program to save expenses and inform consumers of your accomplishments. Contact us today at 914-584-6720 or at karell@CCESworld.com.