In an Executive Order ("EO"), President Joseph Biden directed federal financial regulatory agencies to develop a comprehensive strategy to reduce climate change and associated financial risks. He stated that the global shift away from carbon-intensive energy creates "opportunities to enhance U.S. competitiveness and economic growth." According to the EO, the strategy must include the following elements:

  • measurement, assessment, mitigation and disclosure of climate-related financial risk to the federal government;
  • financing needs associated with achieving net-zero greenhouse gas emissions for the U.S. by no later than 2050;
  • limiting global average temperature rise to 1.5 degrees Celsius;
  • finding areas in which public and private investments can play complementary roles; and
  • at the same time, advancing economic opportunity, worker empowerment, and environmental mitigation, especially in disadvantaged communities and communities of color.

The EO also includes specific instructions to the Secretary of the Treasury, the Secretary of Labor, the Director of the Office of Management and Budget, the Director of the National Economic Council, the Secretary of Agriculture, the Secretary of Housing and Urban Development, the Secretary of Veterans Affairs, the Chair of the Council of Economic Advisers, and the National Climate Advisor on how to utilize their respective positions to further the stated policies.

Treasury Secretary Janet L. Yellen stated that a coordinated approach towards mitigating climate-related financial risks will ensure the effective improvement of the financial system's resilience.


That President Biden would direct the financial regulators to calculate the costs of achieving the EO's climate goals without specifying the means by which the goals are to be achieved suggests a certain futility to the exercise. Assuming that the financial regulators would, under any circumstances, have the requisite information to calculate the costs of building nuclear power plants, windmills and solar farms, how could they possibly do so without some guidance as to how many of each type are to be built and of what size? Are they to do their calculations on the basis of a change in agricultural practices, such as a trend to vegetarianism? On the basis that business travel and flights are to be replaced by Zoom meetings? A meaningful estimate of costs is necessarily dependent upon some significant specificity as to what will be purchased. Where there is no specificity as to what will be purchased, the regulators would seem likely to produce cost-estimates that have a politically attractive number of zeros included, but are devoid of any relationship to the physical world.

The separation of the EO's direction to conduct financial analysis of the results of climate change from practical substance is emphasized by the inclusion in the EO of multiple catchphrases unrelated to climate change, such as "worker empowerment." To take the EO back to the physical world, one of President Biden's first actions was to revoke permits for the Keystone XL pipeline, costing some number of jobs. That does not prove that canceling the pipeline was bad (or good), but it does indicate that the administration's goals with respect to climate change, on the one hand, and with respect to worker empowerment, on the other, are largely unrelated to each other, and are as likely to come into conflict as to be congruent. In that case, which goal should take priority? To take this back to the EO itself, how should the federal financial regulators take into account "worker empowerment" in calculating the economic effects of climate change? Does it add to the costs or subtract from them? Or is it unrelated?

President Biden's EO calls to mind a poem of E.E. Cummings, next to of course god america i. The EO and the poem share the same torrential outflow of catchphrases: for the poem, its "the land of the pilgrims" and the "voice of liberty"; for the EO, its "climate change" and "worker empowerment."

(Finally, a musical selection: Birth of the Cool.)

Primary Sources

  1. Executive Order on Climate-Related Financial Risk
  2. Treasury Statement, Janet L. Yellen: Executive Order on Climate-Related Financial Risks

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