The Treasury Department has unveiled a new set of guidelines for financial institutions with net-zero carbon emissions goals as the Biden administration continues to promote its green energy agenda.
The new voluntary guidelines were announced by Treasury Secretary Janet Yellen during a speech at the Bloomberg Transition Finance Action Forum in New York on Sept. 19.
During her speech, Ms. Yellen said the “physical impacts of climate change are impossible to ignore” and pointed to recent “record-breaking heatwaves” and “unprecedented storms and wildfires” across the globe.
“Such events impose significant economic costs. Global economic losses from natural disasters amounted to almost $200 billion during the first half of this year. Households face increasing challenges, and firms have assets and business models that may be at risk in a world with substantial climate damage,” Ms. Yellen said.
The Treasury secretary went on to note that there are “significant global economic opportunities” related to climate change, citing research estimating that the transition to a carbon-neutral economy will create $3 trillion in global investment opportunities every year between now and 2050.
“In the U.S. this means hundreds of billions in investment opportunities to enhance power generation and the electrical grid, retrofit buildings, and make advancements in agriculture, manufacturing, and transportation,” she said.
“Financial institutions have been taking note,” she continued, adding that various banks and asset managers have been “responding to the demands of their investors and to their own business judgment and prudent risk management to consider climate-related factors.”
Financial Institutions Risk Being Left Behind
In recent years, more than 100 financial institutions in the United States have made independent voluntary net-zero commitments, according to the Treasury Department.
“There is extensive evidence showing that the changing climate has significant financial impacts,” Ms. Yellen concluded. “Without considering these factors, financial institutions risk being left behind with stranded assets, outdated business models, and missed opportunities to invest in the growing clean energy economy.”
The new goals (pdf) unveiled on Tuesday, known as the “Principles for Net-Zero Financing and Investment,” effectively provide guidance and best practices for firms that have adopted net-zero commitments.
Specifically, they focus on financial institutions’ “scope 3” emissions, which are indirect emissions produced from sources that the institution doesn’t directly control, such as those generated when a consumer uses their products.
Financial institutions should establish “robust governance processes” for their commitments, and be transparent about their progress and “account for environmental justice and environmental impacts, where applicable,” in the context of activities associated with their net-zero transition plans, the guidelines also state.
Elsewhere, the goals state that financial institutions with net-zero commitments should “assess client and portfolio company alignment” to their targets and limit the increase in the global average temperature to 1.5 degrees Celsius.
Under the Paris Climate Agreement—adopted in 2015 and formally ratified in 2016—hundreds of nations agreed to pursue efforts to limit the increase in global average temperature to 1.5 degrees Celsius in an effort to “significantly reduce risks and the impacts of climate change.”
In August, Professor Jim Skea, the newly elected head of the United Nations’ Intergovernmental Panel on Climate Change, warned that it is not helpful to imply that a temperature rise of 1.5 degrees Celsius poses an “existential threat to humanity.”
“We should not despair and fall into a state of shock” if global temperatures increase by this amount, and “the world won’t end if it warms by more than 1.5 degrees,” he told Der Spiegel.
Guidelines Will ‘Almost Surely Be Enforced’
The new guidelines were not welcomed by everyone.
In a statement, House Financial Services Committee Chairman Patrick McHenry (R-N.C.) said the guidance would “politicize capital allocation” and advance the Biden administration’s “progressive climate priorities at the expense of sound economic management.”
“Regulators should be focused on immediate risks to our financial system—not climate policy beyond their expertise and statutory authority,” the lawmaker said. “With only a thin veil of setting ‘voluntary standards,’ these so-called principles will almost surely be enforced as though they are laws by unelected federal regulators and Treasury officials who continue to overreach.”
Mr. McHenry further claimed the Treasury Department’s intention is to “direct credit to politically favored activities in order to appease far-left climate activists.”
“The House Financial Services Committee will hold the Administration accountable for its continued efforts to force their political priorities through our financial system,” he concluded.
Elsewhere on Tuesday, the Treasury Department announced that several philanthropic groups have pledged $340 million over the next three years to help develop research, data, and technical resources intended to help financial institutions develop and execute “robust, voluntary net-zero commitments.
“This funding will also support work to facilitate the transition planning efforts of non-financial sectors of the economy,” the department said.
Bezos Earth Fund, Bloomberg Philanthropies, Climate Arc, ClimateWorks Foundation, Hewlett Foundation, and Sequoia Climate Foundation are among the philanthropic groups that have made the multi-million dollar commitment, according to the department.
From The Epoch Times