Biden’s Big Climate Opportunity
(Bloomberg Opinion) -- During the presidential campaign, much of the debate around climate change centered on what Congress should do. That’s an important question, but if history is any guide, it will take time for Congress to settle on a bill — and there is no guarantee of success, even if Democrats beat the odds and end up gaining control of the Senate. In 2008, Democrats won both houses of Congress and spent nearly two years developing and debating a cap-and-trade bill that ultimately failed — leaving it to cities, states and businesses to act largely on their own.
This time, it’s imperative that President-elect Biden take a whole-government approach to climate action right from the get-go. To his credit, his ambitious climate plan recognizes that there is much he can accomplish without Congress — and some of the most important steps he can take have nothing to do with the Environmental Protection Agency.
I have no doubt Joe Biden will appoint a talented EPA administrator who will start reversing some of the damage of the past four years, but that must be only the beginning. It’s essential that he appoint leaders committed to climate action to lead other key agencies, including the Federal Energy Regulatory Commission — which oversees most interstate energy transmission, including gas pipeline applications — as well as the departments of energy and transportation.
The president-elect should expect each member of the cabinet to prioritize climate action and integrate it throughout the agency’s operations. For instance: The Department of Defense should invest in its facilities’ resilience, which is critical to our national security. The same is true for other infrastructure that the federal government supports and the public relies on, including roads and rail, airports and ports, and telecommunication systems.
The Department of Housing and Urban Development can raise environmental requirements for construction projects it funds. And all agencies can integrate climate-change considerations into their procurement processes, lowering the carbon footprint and environmental impact of the goods and services that taxpayers buy through the federal government.
There are other agencies that have the potential to have an enormous impact on emission reductions, though their power is less widely recognized. It’s critical, for instance, that the new head of the Securities and Exchange Commission recognize that climate change is a risk to the global financial system — and act on it. The SEC requires public companies to disclose information about their financial health and can broaden those requirements to include more information about climate risks and preparedness, information that investors need to make smart decisions.
This week, the U.K. became the latest country to announce that it will require companies to report climate risks. More than 1,500 companies, regulators and financial institutions have voiced support for guidelines published by the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures, which I chair. But there is a growing risk countries will adopt differing standards, making it extremely difficult for investors to make apples-to-apples comparisons and blunting the power of the marketplace to drive change.
Investors and consumers — and global economic stability — are well-served by more uniform financial reporting standards, a lesson that became painfully clear after the 2008 crisis. At the same time, increased and uniform disclosure of climate risk is one of the most powerful tools we have in reducing emissions, because more transparency will create stronger incentives for companies to take action, by driving more private investment to those that do.
A global standard for climate reporting is critical, but it will not happen without U.S. leadership. Just as Franklin Roosevelt gathered financial representatives from the allied powers at Bretton Woods, New Hampshire, to agree upon a set of monetary principles which have been the foundation for unprecedented global growth, we need a President Biden to convene a similar group for the purpose of adopting a set of climate-disclosure standards. If Biden seizes the opportunity, it may prove to be one of the most important turning points in the global fight against climate change.
The SEC is not the only financial agency that can accelerate our progress. The role of the Federal Reserve Board is to support economic stability and growth, and climate change is a threat to both. Monetary policy can be used to reduce the costs of borrowing for investments that help to cut emissions, increase resilience and take climate change into account — and to increase costs for those that don’t. The president doesn’t dictate monetary policy, but he can appoint members who recognize the value of policies that incentivize resilience and emissions reductions, and who will work to ensure that the financial system and individual banks take into account the risks associated with climate change.
There is also an enormous amount that the Biden administration can accomplish by empowering its strongest allies: U.S. cities, states and businesses, all of which have taken big strides to reduce their greenhouse gas emissions and are eager to do more. (Bloomberg is on track to our goal of achieving 100% clean energy.) The White House can help each group accelerate their plans by ensuring that any future stimulus funding supports economic recovery in ways that also cut emissions, build resilience and create jobs in green industries.
The latest report by America’s Pledge — a coalition of cities, states and businesses that I launched in 2017 with former California Governor Jerry Brown — found that with strong federal leadership the U.S. can still reach and exceed our Paris Agreement goal. Rejoining the agreement, as Biden will do, will give the U.S. the leverage and authority to work with other countries to raise their ambition and speed up their progress — and send a strong signal to investors. The Biden administration should lead by example by submitting a new, bolder national emissions commitment and outlining how we will get there.
Whatever happens — or doesn’t happen — in the next Congress, our best hope for bold climate action begins with a whole-government approach. And to succeed, it’s critical that President-elect Biden begins laying the groundwork now.
Michael R. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News, and served as mayor of New York City from 2002 to 2013.
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