Key Points:
- The U.S. Federal Reserve has withdrawn from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), citing its scope as beyond the Fed’s statutory mandate.
- Fed Chair Jerome Powell emphasized the Fed’s limited role in climate change policies, asserting that responsibility rests with Congress.
- The decision aligns with broader skepticism of climate-related regulation in the U.S. financial system and mirrors private-sector exits from similar initiatives.
Fed’s Reasoning for Withdrawal
The Federal Reserve stated its decision to leave the NGFS reflects the group’s evolving priorities, which the Fed believes exceed its legal authority. Chair Jerome Powell has consistently maintained that the Fed’s role in addressing climate change is restricted to financial system stability, not shaping environmental policy.
Climate Policy Pushback
The announcement coincides with a broader shift in U.S. policy under President-elect Donald Trump, who has openly criticized government-led climate initiatives. Trump’s impending inauguration is seen as a key factor in regulatory rollbacks and private-sector reevaluations of climate commitments.
Broader Impacts on Climate Alliances
On the same day, the Bank of Montreal became the first Canadian bank to exit the Net-Zero Banking Alliance. Similarly, several major U.S. banks have already withdrawn from the group, signaling a wider trend of skepticism towards climate-focused regulatory frameworks in the financial sector.
A spokesperson for the NGFS has yet to comment on the Federal Reserve’s withdrawal.
