The Federal Reserve today announced it has pulled out of a coalition of central banks formed to tackle climate change risk in the financial sector. The move came a few days before President-elect Trump took office, with his administration vowing to once again exit the 2015 Paris climate treaty that gave rise to the coalition.
The Network of Central Banks and Supervisors for Greening the Financial System was launched in 2017 to share best practices and contribute to the development of environment and climate risk management in the financial sector. In a brief statement, the Fed said that while it appreciated the engagement with the NGFS and its members, “the work of the NGFS has increasingly broadened in scope, covering a wider range of issues that are outside of the [Fed] board’s statutory mandate.”
The Biden administration pushed banking regulators to account for climate-related financial risks in their supervision. Critics such as Fed Governor Michelle Bowman argued that climate change was outside the scope of the Fed’s mandate.
