US Treasury Withdraws From Global Climate-related Financial Oversight Initiative

The U.S. Department of the Treasury’s Federal Insurance Office (FIO) has withdrawn from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). The decision follows President Trump’s executive orders prioritizing national interests in international environmental agreements and policies supporting American energy independence. Treasury officials said NGFS initiatives do not align with the administration’s goals of growing the U.S. economy and creating jobs. FIO also stated that aspects of NGFS’s work, particularly those related to monetary policy, extend beyond its core responsibilities.

The NGFS, established in 2017, is a coalition of central banks and financial regulators dedicated to addressing climate-related risks in the financial sector. The network promotes best practices and policies aimed at integrating environmental considerations into financial stability frameworks. Members collaborate to improve financial institutions’ ability to assess and manage risks linked to climate change. The group has grown to include over 140 central banks and regulators, representing some of the most significant financial markets.

European central banks committed to integrating climate considerations into financial oversight

The U.S. withdrawal marks a shift in policy regarding climate-related financial oversight. The Federal Reserve joined the NGFS in December 2020, a move that signaled increased focus on climate risk within the U.S. financial system. The exit reverses that direction, raising questions about the extent to which regulators will continue monitoring climate-related financial threats. Financial firms operating in the U.S. may face fewer regulatory requirements tied to climate risk, while those with international operations will need to adhere to stricter guidelines abroad.

The impact on the NGFS remains uncertain. The U.S. departure removes the world’s largest economy from direct participation in the network’s research, policy recommendations, and international regulatory coordination. While European central banks remain committed to integrating climate considerations into financial oversight, the absence of U.S. involvement could slow momentum for global adoption of green finance standards. Some countries may view the U.S. withdrawal as justification to delay or scale back their commitments.

For financial markets, the withdrawal could lead to a divergence in regulatory approaches. Some firms may adjust their risk models to reflect a U.S. policy shift that places less emphasis on climate risk disclosures. Others, particularly those with operations in jurisdictions committed to NGFS principles, may continue enhancing their environmental risk assessments. The move adds uncertainty for financial institutions navigating an evolving regulatory landscape.

FIO officials emphasized that the withdrawal does not mean disengagement from all discussions on financial risk. They said the office will continue working with domestic regulators and international partners on issues relevant to U.S. financial stability. However, climate-related financial risks may receive less attention within U.S. financial policy discussions. The shift underscores a broader debate about the role of government in addressing climate concerns through financial regulation.

The withdrawal aligns with a broader policy stance that prioritizes domestic economic objectives over international environmental initiatives. The decision reflects a recalibration of regulatory priorities and signals a reduced focus on integrating climate considerations into U.S. financial oversight. Market participants will be watching closely to assess how financial regulators adapt to this policy shift and what it means for future climate risk management practices.