Biden poised to issue order on climate disclosures: US envoy Kerry

The Biden Administration would encourage companies to align portfolios with the Paris Climate agreement.
The Biden Administration would encourage companies to align portfolios with the Paris Climate agreement.PHOTO: REUTERS

WASHINGTON (BLOOMBERG) - President Joe Biden is set to issue an executive order on climate disclosure that could shift investments, according to US climate envoy John Kerry.

"President Biden is poised to issue an executive order that will require disclosure," Kerry said at an International Monetary Fund event Wednesday (April 7). "It's going to change allocation of capital. Suddenly people are going to be making evaluations considering long-term risk to the investment based on the climate crisis."

Kerry said that Europe has "already done that."

Certain financial firms in the European Union are required to consider environmental, social and governance - or ESG - factors in their investments and information provided about those investments.

A White House official said the timing and details of the order are still being worked out, and the announcement isn't imminent.

Shareholder risk

Kerry made the comments after IMF Managing Director Kristalina Georgieva said private capital is already moving toward less climate-risky investments. He didn't give details about the potential order or specify which companies or investments the order would apply to.

The US Securities and Exchange Commission signalled last month that corporations will have to disclose more to shareholders about how climate change affects their businesses. The agency said it will solicit public comment on potential policy changes.

Many Wall street firms have been vocal about the risk of climate change amid pressure from shareholders and activists, as well as concern of its financial impact.

Larry Fink, the chief executive officer of BlackRock, the world's largest asset manager, has warned corporate America that climate change will bring about a "fundamental reshaping of finance."

Treasury Secretary Janet Yellen spoke Tuesday about the Biden Administration's general plan to align tax policy with climate change goals. That includes a shift to carbon-free sources of electricity by 2035. Yellen said that the administration would encourage companies to align portfolios with the Paris Climate agreement, to which the US recently rejoined under Biden.