President-elect Biden won the 2020 presidential election with the strongest climate mandate in history. Fulfilling that mandate will require urgent action from his financial appointees, especially his Treasury Secretary.

The Biden administration’s climate agenda must ensure that U.S. financial institutions zero out their climate impact, especially by phasing out their fossil and deforestation financing.

Wall Street banks, insurance companies and asset managers are the world’s largest financial backers of the corporations driving climate chaos. President Biden must ensure that their fossil fuel and deforestation financing is firmly on a path to zero in time for the crucial U.N. climate conference in Glasgow in November 2021.

How President-Elect Biden can stop the money pipeline to climate chaos

  • The President should make clear by executive order or other means that addressing climate change is a central part of financial regulators’ missions. This means steps, such as the following:
    • Appoint strong, pro-climate leaders and high-level staff across financial regulatory agencies. Read more about what appointing pro-climate leaders looks like.
    • Create new high-level positions, units, or divisions to work on climate within financial regulatory agencies.
    • Ensure that the Financial Stability Oversight Council and its member agencies begin work right away on climate plans, and ensure that they are implementing the plans by COP 26.
  • Financial regulators should immediately start collecting the data and doing the analysis necessary to integrate the climate crisis fully into financial regulation, and empower investors to invest their values:
    • Require the disclosures needed for climate-related research, analysis, rulemaking, supervision, and enforcement.
    • Incorporate climate into stress tests and scenario analyses (tools for analyzing how financial institutions would weather stressful economic conditions).
    • Write rules permitting and requiring investment advisors and fiduciaries to implement their clients’ value choices — like opposition to investing in fossil fuels or deforestation-risk commodities — and require the disclosures they need to do so.
  • Financial regulators should restrict and phase out finance for fossil fuels and deforestation:
    • Restrict banks and other financial institutions from directly owning fossil-fuel or deforestation-causing commodities or businesses.
    • Integrate climate risk into capital charges and capital requirements.
    • Begin using regulatory tools to limit investment in and financing of fossil fuels and deforestation, phasing them out on a schedule consistent with science-based targets.
  • Treasury and the Federal Reserve should stop using emergency rescue and recovery programs to subsidize fossil fuels and deforestation. Instead, they should invest in productive, just, clean recovery.
    • Include climate and financial stability conditions in Treasury- or Fed-backed emergency or stimulus initiatives.
    • Wind down the Federal Reserve’s existing fossil fuel exposure to zero in a responsible way consistent with science-based climate targets.
    • In the immediate term, lend directly to cities, counties, states, territories, tribal governments, and other public borrowers at zero percent interest for green, just recovery programs.
    • Direct loans should be made to the public borrowers mentioned above to prevent further harm to Black, Brown, and Indigenous communities that have borne the brunt of COVID-19, the climate crisis, pollution from the fossil fuel industry, and financial hardship related to the pandemic. This means ensuring these government bodies and public agencies have access to the necessary funding to protect and expand critical public and social welfare services, to offer rent, mortgage and utility payment cancellation, and expand social welfare programs.
    • Study and design a public investment authority to lend directly to cities, counties, states, and other public borrowers for Green New Deal type initiatives and green infrastructure and housing projects that create good, local, union jobs with targeted hiring of frontline communities. An example might include improving or building new public housing with sustainable materials with these funds and ensuring local residents benefit from the jobs created.

Stop the Money Pipeline is a network of over 130 organizations and tens of thousands of everyday people who are working to hold the financial sector accountable for its role in the climate crisis. Read more about the coalition.