Federal Government and Private Sector Climate Change Developments | Lathrop GPM



The implications of climate change have evolved from an esoteric topic that a very limited number of companies focused on just a few years ago, to a topic that is becoming more and more common by the day. President Biden has campaigned to demand that companies provide more details on environmental risks and greenhouse gas emissions as part of a larger agenda to fight climate change. Since late January, the Biden administration has suspended oil and gas leases on federal lands, its Energy Secretary effectively reopening a $ 40 billion dormant loan program for clean energy projects and the administration. started pushing Congress into billions of dollars in infrastructure spending.

Even the departments that are not traditionally considered to play a role in the fight against climate change are mobilized. For example, the United States Department of Agriculture can roll out incentives for farmers and agribusinesses to adopt climate-friendly practices without the need for additional regulation and could make American food more attractive in export markets. This alert provides an overview of the developments underway in the federal government and in the private sector to combat climate change.

A possible evolution towards mandatory disclosure of climate change

The Acting Chairman of the Securities and Exchange Commission (SEC) said at the end of February: “Now more than ever, investors are taking climate-related issues into account when making their investment decisions… It is our responsibility to ensure that they have access to important information when planning their financial future… ”The 2010 SEC guidelines suggested that companies disclose in documents how their operations could be affected by climate change, including severe weather events, demand for high carbon products and environmental regulations. Few companies currently disclose much about climate change in their SEC filings, although many large companies voluntarily publish sustainability reports that sometimes disclose their greenhouse gas emissions, water use and other environmental measures. SEC staff are reportedly exploring the possibility of offering standardized disclosure for public companies and moving to mandatory climate change disclosure within the next four years. In addition, the SEC is also closely monitoring developments in the European Union and other jurisdictions.

Major U.S. automakers pledge to produce zero-emission vehicles

Many global companies are now integrating climate issues into their operations and business relationships. For example, General Motors became the first of the major US automakers to announce a plan to sell only zero-emission cars and trucks by 2035. Ford recently announced that it would produce 100% of its passenger vehicles in Europe as zero emission vehicles. , all electric or plug-in hybrid by mid-2026 before finally switching to all-electric by 2030.

Big banks commit to Net Zero and commit to supporting their customers

Banks are also studying the impact of the climate on their loans. Citigroup, for example, announced on March 1, 2021 that it would seek to achieve zero net greenhouse gas emissions from its own operations and the activities of its customers by 2050. Citigroup CEO Jane Fraser, said in a blog post that “Net zero means rethinking our business and helping our clients rethink theirs. For banks, what some don’t realize is that net zero does not only include our own operations, but also the impacts of our core business, in other words, our funding. . . Fraser also wrote, “As the world’s most global bank, we are interconnected with many carbon-intensive sectors that continue to contribute to global economic development. We are committed to bringing as many clients as possible with us. on this journey and to work tirelessly with them to get it right… ”Morgan Stanley, Bank of America and JP Morgan Chase had previously announced their intention to achieve net zero emissions. As an example of Citigroup’s commitment to this goal, it is one of many large banks to have halted funding for Artic fuel drilling projects.

Climate change and insurance

The increasing frequency and severity of extreme weather events – from forest fires in the United States to record heat waves in Europe, to flooding in Japan – have shed the regulatory spotlight on insurance risk and climate change. . As increasing climate-related losses threaten the viability of insurers’ business portfolios and investment portfolios, many regulators are unaware of how prepared or unprepared carriers are to deal with this threat. fully convinced that carriers are indeed prepared. Aviva, a UK-based global savings, retirement and insurance company serving nearly 32 million customers, plans to become a Net Zero business by 2040 and, in early February 2021, threatened to get rid of its stocks and bonds in 30 of the largest companies in the world. carbon emitters if their councils do not take enough action to tackle climate change. Aviva said it expects these large emitting companies to commit to achieving net zero carbon emissions by 2050 and ensure their plan to do so is in line with guidelines set by Science-Based. Targets Initiative, a group led by NGOs that approves climate plans. The increase in extreme weather events is reflected in the number of people traveling to insure their property against weather-related losses. Insurance companies have responded by developing tools to better understand climate risks and vulnerabilities. This includes products such as microinsurance, catastrophe bonds, and index insurance.

Climate change issues are becoming increasingly diverse and complex, drawing on the expertise of many technical and legal disciplines. To comprehensively address the full range of implications that exist with this burgeoning topic, it is necessary to have access to professionals with the appropriate expertise and experience.

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