Bloomberg Businessweek - USA (2020-11-16)

● ByMichaelR.Bloomberg

Duringthepresidentialcampaign,muchofthedebatearound

climatechangecenteredonwhatCongressshoulddo.That’san

importantquestion,butif historyis anyguide,it willtaketime

forCongresstosettleona bill—andthere’snoguaranteeofsuc-

cess,evenif Democratsbeattheoddsandendupgainingcontrol

oftheSenate.In2008,DemocratswonbothhousesofCongress

andspentalmosttwoyearsdevelopinganddebatinga cap-and-

tradebillthatultimatelyfailed—leavingit tocities,states,and

businessestoactlargelyontheirown.

Thistime,it’simperativethatPresident-electJoeBidentake

a whole-governmentapproachtoclimateactionrightfrom

theget-go.Tohiscredit,hisambitiousplanrecognizesthathe

canaccomplishmuchwithoutCongress—andthatsomeofthe

mostimportantstepshecantakehavenothingtodowiththe

EnvironmentalProtectionAgency.I havenodoubtBidenwill

appointa talentedEPAadministratorwhowillstartreversing

someofthedamageofthepastfouryears,butthatmustbeonly

thebeginning.It’sessentialheappointleaderscommittedto

climateactiontoleadotherkeyagencies,suchastheFederal

EnergyRegulatoryCommission—whichoverseesmostinterstate

energytransmission,includinggaspipelineapplications—aswell

asthedepartmentsofEnergyandTransportation.

Thepresident-electshouldexpecteachmemberofthecabi-

nettoprioritizeclimateactionandintegrateit throughouttheir

agency’soperations.Forinstance:TheDepartmentofDefense

shouldinvestinitsfacilities’resilience,whichis criticaltoour

nationalsecurity.Thesameistrueforotheressentialinfra-

structurethefederalgovernmentsupports,includingroads

andrail,airportsandports,andtelecommunicationssystems.

TheDepartmentofHousingandUrbanDevelopmentcanraise

environmentalrequirementsforconstructionprojectsit funds.

Andallagenciescanintegrateclimatechangeconsiderations

intotheirprocurementprocesses,loweringthecarbonfootprint

andenvironmentalimpactofthegoodsandservicesthattax-

payersbuythroughthefederalgovernment.

Otheragencieshavethepotentialtohaveanenormousimpact

onemissionsreductions,thoughtheirpoweris lesswidelyrec-

ognized.It’scritical,forinstance,thatthenewheadofthe

SecuritiesandExchangeCommissionrecognizeclimatechange

asa risktotheglobalfinancialsystem—andactonit.TheSEC

requirespubliccompaniestodiscloseinformationabouttheir

financialhealth;it canbroadenthoserequirementstoinclude

moredataaboutclimaterisksandpreparedness,information

thatinvestorsneedtomakesmartdecisions.

OnNov.9 theU.K.becamethelatestcountrytoannouncethat

it willrequirebusinessestoreportclimaterisks.Morethan1,

companies,regulators,andfinancialinstitutionshavevoiced

supportforguidelinespublishedbytheFinancialStability Board’s

TaskForceonClimate-RelatedFinancialDisclosures,which I chair.

Butthereis a growingriskcountrieswilladoptdifferingstandards,

makingit extremelydifficultforinvestorstomakeapples-to-apples

comparisonsandbluntingthepowerofthemarketplace to drive

change.Investorsandconsumers—andglobaleconomicstability—

arewell-servedbymoreuniformfinancialreportingstandards,

a lessonthatbecamepainfullyclearafterthe 2008 crisis. At the

sametime,increasedanduniformdisclosureofclimaterisk is one

ofthemostpowerfultoolswehaveinreducingemissions: More

transparencywillcreatestrongerincentivesforcompanies to take

action,bydrivingprivateinvestmenttothosethatdo.

A globalstandardforclimatereportingis critical,but it won’t

happenwithoutU.S.leadership.JustasFranklinRoosevelt gath-

eredfinancialrepresentativesfromthealliedpowersat Bretton

Woods,N.H.,toagreeupona setofmonetaryprinciples that

havebeenthefoundationforunprecedentedglobalgrowth,

PresidentBidenneedstoconvenea similargrouptoadopt a set

ofclimate-disclosurestandards.If heseizestheopportunity, it

mayprovetobeoneofthemostimportantturningpoints in the

globalfightagainstclimatechange.

TheSECis nottheonlyfinancialagencythatcanaccelerate

ourprogress.TheroleoftheFederalReserveBoardis to support

economicstabilityandgrowth,andclimatechangeis a threat to

both.Monetarypolicycanbeusedtoreducethecostsof borrow-

ingforinvestmentsthathelptocutemissions,increaseresilience,

andtakeclimatechangeintoaccount—andtoincreasecosts for

thosethatdon’t.Thepresidentdoesn’tdictatemonetary policy,

buthecanappointmemberswhorecognizethevalueof policies

thatencourageresilienceandemissionsreductionsandwho will

worktoensurethatthefinancialsystemandindividualbanks take

intoaccounttherisksassociatedwithclimatechange.

TheBidenadministrationcanalsoaccomplishanenormous

amountbyempoweringitsstrongestallies:U.S.cities, states,

andbusinesses,allofwhichhavetakenbigstridesto reduce

emissionsandareeagertodomore.(BloombergLPis on track

toachieveourgoalof100%cleanenergy.)TheWhiteHouse can

helpacceleratetheirplansbyensuringthatanyfuturestimulus

supportseconomicrecoveryinwaysthatalsocutemissions,

buildresilience,andcreategreenjobs.

ThelatestreportbyAmerica’sPledge—acoalition of cit-

ies,states,andbusinessesthatI launchedin 2017 with former

CaliforniaGovernorJerryBrown—foundthatwithstrong fed-

eralleadershiptheU.S.canstillreachandexceedour Paris

Agreementgoal.Rejoiningtheagreement,asBidenwill do,

willgivetheU.S.theleverageandauthoritytoworkwith other

countriestoraisetheirambitionsandspeeduptheirprogress—

andsenda strongsignaltoinvestors.TheBidenadministration

shouldleadbyexamplebysubmittinga new,boldernational

emissionscommitmentandoutlininghowwewillgetthere.

Whatever happens—or doesn’t happen—in the next

Congress,ourbesthopeforboldclimateactionbeginswitha

whole-governmentapproach.Andtosucceed,it’scritical that

President-electBidenbeginslayingthegroundwork now. <BW>

Formorecommentary, go to bloomberg.com/opinion

Biden’s Big Climate

Change Opportunity

November 16, 2020

◼ BLOOMBERG OPINION

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