By Abdullahi Lukman
Global banking regulators have agreed to intensify their efforts to understand and address the financial risks posed by climate change, even as the United States continues to scale back its climate-related financial initiatives.
The decision was made during a meeting of the oversight body of the Basel Committee on Banking Supervision, the international forum for banking regulators, the Bank for International Settlements (BIS) announced on Monday.
The committee prioritized assessing the financial implications of extreme weather events and agreed to release a voluntary disclosure framework for jurisdictions to consider adopting.
While the Basel Committee cannot enforce its standards, its guidelines heavily influence national regulatory practices.
The move highlights a widening transatlantic divide in climate finance policy.
Related Posts
European regulators, particularly the European Central Bank, have prioritized integrating climate risk into supervisory practices. In contrast, U.S. efforts have slowed, with regulatory agencies rolling back earlier commitments.
Although the U.S. Federal Reserve has conducted some preliminary climate risk assessments, Chair Jerome Powell has emphasized the Fed’s limited role in climate policy.
The divergence grew more pronounced after the Fed withdrew from the Network for Greening the Financial System (NGFS) in January—a global coalition of central banks focused on climate risk in finance.
Further signaling this shift, the U.S. Treasury’s Office of the Comptroller of the Currency exited a joint climate risk framework in March, labeling it overly burdensome.
Analysts now expect the Federal Deposit Insurance Corporation (FDIC) and the Fed to follow suit.
Despite the lack of consensus, analysts note that the Basel Committee’s stance aligns more closely with European and British regulators.
As debates continue over how deeply climate change should be embedded in central banking, the direction taken by global regulators may shape financial policy well into the future.
