Yesterday, US Treasury Secretary Janet Yellen announced the Treasury’s ambitions to promote “net zero financing and investment” and outlined their plans to compel financial services firms to align with their goals. The announcement comes as part of the Treasury’s broader efforts to enhance cooperation on climate change, both domestically and globally.
The Secretary stated, “The principles we are launching today will support the implementation of net-zero commitments and guide further technical work. These principles are an integral part of the Treasury’s commitment to strengthening public-private and global cooperation on climate issues. We will continue leading the G20 Sustainable Finance Working Group and supporting the Net-Zero Data Public Utility. Additionally, we remain committed to implementing tax provisions that reduce inflation, conducting analytical work on the impact of climate change on household finances and insurance, and engaging with community development financial institutions on their climate-related priorities.”
However, Representative Patrick McHenry, Chairman of the House Financial Services Committee, expressed concerns over Secretary Yellen’s pursuit of Environmental, Social, and Governance (ESG) policies, arguing that they prioritize progressive climate priorities at the expense of sound economic management. He criticized the Treasury for focusing on climate issues beyond their expertise and legal authority. He accused unelected federal regulators and Treasury officials of overreaching their powers by enforcing “voluntary standards” as de facto laws. McHenry posited that the Treasury’s intention is to direct credit towards politically favored activities to appease far-left climate activists. He vowed that the House Financial Services Committee would hold the Biden Administration accountable for their efforts to impose political priorities on the financial system.
The Biden Administration has been pushing a radical agenda, seeking to incorporate social ambitions into financial services that extend beyond traditional actions. However, this agenda has faced resistance from the Republican-controlled House of Representatives. With the White House and the Senate also under opposition control, there appears to be little chance of halting these initiatives.
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