In brief
In a surprising move, the Federal Reserve announced its withdrawal from a global network aimed at addressing climate-related financial risks, just days before President-elect Donald Trump resumes his presidency. This decision follows the Fed's previous entry into the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) in December 2020, a decision that drew both support and concern based on partisan lines.
The central bank maintained that the decision stemmed from the network's scope expanding beyond its statutory obligations. Although the Fed had started engaging with climate financial risks amid rising extreme weather events, Fed officials stated the NGFS's increasing diversity of subjects became a reason to step back. The withdrawal was supported by five members of the Fed’s Board of Governors, while two abstained, highlighting a division within the leadership.While the Fed’s participation was viewed positively, some skeptics, particularly among Republican lawmakers, previously expressed concerns that the network's directives could hinder access to capital for essential industries. With Trump’s administration approaching, experts are left speculating on how this shift will impact financial regulations concerning climate risk in the U.S.Madeleine Ngo, a dedicated economic policy journalist, focuses on the interplay between national policies and local impacts, reflecting the broader implications of such significant moves as seen with the Fed's recent actions.
