U.S. Federal Reserve withdraws from climate coalition

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The United States Federal Reserve has withdrawn from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), a global coalition of central banks engaged in the study of climate risk that was launched in 2017.

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“While the Board has 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 Board’s statutory mandate,” the central bank said in a statement on Friday.

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The Fed has come under pressure in recent years from Republican lawmakers, including over concerns that climate concerns have unduly influenced financial regulation and that the central bank has become increasingly politicized.

In September, two House Republicans asked the Government Accountability Office to evaluate U.S. bank regulators’ membership in the NGFS.

Graham Steele, a former Biden-era Treasury official, said the Fed’s decision is “clearly a political move.”

“It defies what we know about the science and economic science risks of climate change,” Steele said in a statement. “There is no way to read this as anything other than responding to short-term political considerations.”

The central bank joined the global coalition in 2020.

Basel Climate Plan

The Fed’s move comes after U.S. regulators had refused to back a plan last year that would have seen the Basel Committee on Banking Supervision push lenders to disclose their climate risk.

The group has since pushed back a deadline for climate-risk disclosure by banks, following opposition against earlier proposals.

The Federal Deposit Insurance Corp. (FDIC) also is planning to leave a group aimed at reducing finance’s climate effects.

The regulator will exit the Network for Greening the Financial System, FDIC Vice Chairman Travis Hill said earlier this month. He said the FDIC needs a new direction and expects that to begin after president-elect Donald Trump takes office.

—With assistance from Stephanie Stoughton.

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