On October 7, 2021, Treasury released a Climate Action Plan (CAP) in accordance with Executive Order 14008 to increase the department’s resiliency in the face of climate change. In announcing the CAP, Treasury Secretary Janet Yellen said, “Climate change isn’t just a specter on the horizon … It is a present challenge, and we must adapt.” The CAP, which focuses on internal changes Treasury can make to mitigate climate risks to its operations, consists of five priority action areas:
Rebuild programs and capabilities that might have atrophied or stagnated.
Address climate change impacts and vulnerabilities across the range of Treasury operations, including administrative, manufacturing, and law enforcement activities.
Ensure a climate-focused approach to managing Treasury’s real property portfolio footprint.
Enable procurement management to fully consider climate change realities.
Provide, measure, and account for a financial investment approach appropriate to the Treasury’s climate objectives.
The CAP’s scope is wide-ranging and includes mitigation of vulnerabilities to physical assets and supply chains, ensuring transparency of climate resilience investments, and education of management and staff on climate risks.These areas of focus internally could form a basis for future guidance to the banking system.
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While the Treasury’s CAP does not propose specific regulations for financial institutions, it is a reflection of Treasury’s climate change priorities and could offer insight into how the OCC—particularly under Omarova—might incorporate climate risk into oversight of US banks.
Special thanks to Nick Bohmann for contributing to this article.