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President Joe Biden speaks during climate change virtual summit from the East Room of the White House campus April 22, 2021. (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)

President Biden issued an executive order Thursday that directs agencies government-wide to launch or expand efforts to analyze and lessen economic risks stemming from climate change.

Why it matters: The order lays the groundwork for new oversight and mandates that would affect banking and other sectors. It signals growing concerns that the government lacks sophisticated understanding of how global warming creates new or growing jeopardy for financial and government institutions and consumers.

  • "Our modern financial system was built on the assumption that the climate was stable," said National Economic Council director Brian Deese. "And today it's clear that we no longer live in such a world."

Driving the news: Major components of the order, per a White House summary, include...

  • Ordering a strategy within 120 days to "identify and disclose climate-related financial risk to government programs, assets, and liabilities." It would identify "public and private financing" needed to reach net-zero U.S. emissions by 2050.
  • It calls on the Treasury secretary, as head of the multi-agency Financial Stability Oversight Council, to specifically analyze risks to financial system stability. That effort would bring ideas within 180 days to reduce risks, including agency steps to improve risk disclosures and stitch climate-related financial risks into regulation and supervision.
  • Tasking the Labor Department with exploring how to protect pensions and assess how the Federal Retirement Thrift Investment Board weighs climate risk.
  • Efforts to weave climate risk consideration into federal lending and procurement. They include potential new requirements on federal suppliers to disclose emissions and financial risks, and ensure that agency procurement practices reduce them.

Catch up fast: The order, to some degree, reinforces several efforts already underway.

  • The Treasury Department has already created a climate change "hub" and appointed a leader who reports directly to Secretary Janet Yellen.
  • Another example: The Securities and Exchange Commission is moving closer to beginning to write new disclosure rules for public companies.

Quick take: The rollout underscores high-level focus on the topic, with a who's who of top officials including Deese, Yellen and national climate adviser Gina McCarthy all briefing reporters.

  • McCarthy made clear that some form of mandatory risk disclosure is in the works.
  • "This cannot be voluntary. This cannot be optional," McCarthy said.
  • "The stakes are simply too high. The federal government has to lead by example in its own operations, and we need to require the same level of responsibility from those we do business with," she added.

The big picture: Climate-related financial risk is a very broad term that encompasses several types of jeopardy.

  • It ranges from economic losses from extreme weather and climate events to ways that emissions regulations and transition to lower carbon energy affect banks' portfolios and the viability of polluting industries.
  • The White House summary notes that extreme weather "disrupt entire supply chains and deprive communities of food, water, or emergency supplies," and also cites risks to power grids and risks to homes and businesses from sea-level rise.

What they're saying: The Stop The Money Pipeline coalition called the order a "important step for the climate finance movement" and called for completion of the various reports and plans in the order to be complete before the pivotal UN climate summit in November.

  • The coalition is an umbrella group of activists pushing for financial institutions to end financing for fossil fuel projects.

Go deeper: Prominent investors jump into the climate risk space

Go deeper

Prominent investors jump into the climate risk space

Illustration: Sarah Grillo/Axios

Big name investors are putting new capital behind "climate intelligence" — the sophisticated analytics that companies and governments will need to uncover and reduce risk in a warming world.

Why it matters: With the effects of climate change already visible in the form of extreme weather events and sea level rise, companies face increasing pressure from investors and regulators to grapple with their climate-related vulnerabilities.

Biden administration reinstalls climate official Trump had removed

Joe Biden. Photo: Anna Moneymaker-Pool/Getty Images

The White House said this morning that veteran climate scientist Mike Kuperberg is returning as head of the U.S. Global Change Research Program (USGCRP) following his removal from the position under President Trump.

Why it matters: The USGCRP coordinates climate research at 13 federal agencies and produces deeply researched, granular reports every four years that help inform policymakers, corporations and others about the causes and consequences of climate change on the United States.

Updated 35 mins ago - Sports

Katie Ledecky wins gold in first women's 1500m freestyle

Team USA's Katie Ledecky celebrates after winning the final of the women's 1,500m freestyle swimming event during the Tokyo 2020 Olympic Games at the Tokyo Aquatics Centre in Tokyo on Wednesday. Photo: Attila Kisbenedek/AFP via Getty Images)

Katie Ledecky took home the Olympic gold medal in the women's 1,500-meter freestyle swimming race Tuesday evening, becoming the first female swimmer to win the newly added division. Team USA's Erica Sullivan won silver.

Of note: The Tokyo Games mark the first time that the long-distance race has been open to women, and Ledecky paid tribute to her predecessors after the race. "I just think of all the great U.S. swimmers who didn’t have a chance to swim that event," she said on NBC.