A warming planet holds potential risks for home prices, investments, banking and other aspects of the global economy, the government said.
President Biden has ordered government agencies to prepare for climate-related shocks across the economy, as escalating disasters threaten home prices, the value of retirements funds and even the stability of the global financial system. The executive order signed Thursday is the latest indication of how climate change, once dismissed as a distant threat, is already complicating life for Americans. It follows a report last week from the Environmental Protection Agency, which showed that global warming is now being felt in the United States in the form of more heat waves, wildfires, floods and other disasters. Mr. Biden’s new push addresses the risks that disasters could pose to consumers, businesses, investors and the government itself. Experts warn of two broad types of financial risk posed by a hotter planet: The growing cost to businesses and investors as climate-related disasters damage or destroy buildings, crops or supply chains; and the potential for a sudden drop in the value of companies that depend on fossil fuels, as governments or consumers embrace wind, solar and other sources of energy that do not produce the carbon emissions driving global warming. Either could destabilize major sectors of the economy, prompting comparisons with the Great Recession of 2007-9. “Our modern financial system was built on the assumption that the climate was stable,” Brian Deese, head of President Biden’s National Economic Council, said Thursday on a call with reporters. “It’s clear that we no longer live in such a world.” The order directs officials to report the risk that climate change poses to federal assets and tax revenue. It tells the Labor Department to find ways to protect pensions. And it says the government should consider requiring the companies with which it does business to disclose their greenhouse gas emissions.
