In a notable shift just before President-elect Donald J. Trump assumes office, the Federal Reserve has decided to withdraw from a global climate-focused financial network. The announcement was made on January 17, 2025, highlighting concerns over the expanded scope of the group and a potential alignment with the new administration's priorities.
Federal Reserve Exits Climate Network, Pivoting Ahead of Trump’s Inauguration
Federal Reserve Exits Climate Network, Pivoting Ahead of Trump’s Inauguration
Fed’s decision to leave climate-focused financial network reflects changing political landscape just days before Trump’s return to power.
The Federal Reserve confirmed its departure from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), a coalition that aims to facilitate dialogue among central banks and financial regulators regarding climate-related financial risks. The Fed had initially joined this network in December 2020 amid a growing recognition of the economic threats posed by climate change.
"While we have valued our engagement with the NGFS, the organization’s evolving agenda has increasingly evolved beyond the Federal Reserve's statutory responsibilities," the central bank stated. This decision follows pressure from Republican lawmakers who had previously expressed apprehension about the NGFS's influence on U.S. financial industries, arguing that its guidelines could pose limitations on capital access and impose constraints on businesses.
Five voting members of the Fed's Board of Governors, including Chair Jerome H. Powell, supported the resolution to exit, while two members abstained. This change signifies the Federal Reserve's potential shift away from previous commitments to climate risk under the Biden administration. As Trump's presidency approaches, sentiments among key policymakers are beginning to realign, indicating a broader shift in regulatory approaches related to climate finance.
The NGFS aims to mobilize finance in support of a sustainable economy—an objective that now faces uncertainty as the Fed recalibrates its focus amid changing political leadership. This departure raises questions about the future of climate-related financial regulations in the U.S. and their implications for the banking sector amidst increasing environmental concerns.
Madeleine Ngo covers U.S. economic policy and its societal effects, underscoring the ongoing interplay between finance and environmental accountability.
"While we have valued our engagement with the NGFS, the organization’s evolving agenda has increasingly evolved beyond the Federal Reserve's statutory responsibilities," the central bank stated. This decision follows pressure from Republican lawmakers who had previously expressed apprehension about the NGFS's influence on U.S. financial industries, arguing that its guidelines could pose limitations on capital access and impose constraints on businesses.
Five voting members of the Fed's Board of Governors, including Chair Jerome H. Powell, supported the resolution to exit, while two members abstained. This change signifies the Federal Reserve's potential shift away from previous commitments to climate risk under the Biden administration. As Trump's presidency approaches, sentiments among key policymakers are beginning to realign, indicating a broader shift in regulatory approaches related to climate finance.
The NGFS aims to mobilize finance in support of a sustainable economy—an objective that now faces uncertainty as the Fed recalibrates its focus amid changing political leadership. This departure raises questions about the future of climate-related financial regulations in the U.S. and their implications for the banking sector amidst increasing environmental concerns.
Madeleine Ngo covers U.S. economic policy and its societal effects, underscoring the ongoing interplay between finance and environmental accountability.
