“The intensifying impacts of climate change present physical risk to assets, publicly traded securities, private investments, and companies” as well as a “transition risk” from a shift away from fossil fuels, the order says. The goal of Mr. Biden’s many other climate regulations, such as electric-car mandates, is to make fossil-fuels obsolete, and he wants financial regulators to order private capital to assist.
“The Federal Government has broad exposure to increased costs and lost revenue as a result of the impacts of unmitigated climate change,” the executive order says. This is almost comic when you consider the fiscal risks of Mr. Biden’s $6 trillion in actual and proposed new spending, much of which is for subsidizing non-economic investments in green energy. Think Solyndra or Fisker Automotive.
Enter the Financial Stability Oversight Council (FSOC), which Congress established after the financial panic. Mr. Biden directs Ms. Yellen, as FSOC Chair, to consult with other regulators to make institutions disclose how they account for climate related-risks, including those caused by government policies.
The discretion here is broad, and expect it to be used. Banks, insurers and asset managers may soon be required to disclose, justify and perhaps write down the value of their fossil-fuels assets.
Mr. Biden also wants to enlist the trillions of dollars in American retirement accounts for his climate agenda. He directs Labor Secretary Marty Walsh to “identify agency actions that can be taken under the Employee Retirement Income Security Act of 1974 . . . to protect the life savings and pensions” of Americans “from the threats of climate-related financial risk.” Translation: Retirement fund managers will soon have a fiduciary duty to reduce CO2 emissions and promote green energy.
Mr. Biden’s order doesn’t specifically call out the Federal Reserve. But a Senate Democratic report last year demanded that the Fed use regulations including annual stress tests and capital rules to make financial institutions invest in green energy and divest from fossil fuels. Chairman Jerome Powell is already obliging even without explicit orders.
All of this direction of private capital markets will presumably be done by the administrative state, with barely a fare-thee-well from Congress. Rule by the climate technocrats is coming fast.