Fed Exits Climate Risk Group

By Pete Schroeder

WASHINGTON (Reuters) – The U.S. Federal Reserve announced Friday its withdrawal from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), focused on climate risk management in finance.

In a statement, the Fed cited the group’s broadened scope as outside its statutory mandate. The Fed joined NGFS in 2020, and this exit comes just days before President-elect Donald Trump takes office, who is critical of government-prescribed climate policies.

Formed in 2017, the NGFS helps central banks integrate climate change risks into monetary policy and financial supervision. A spokesperson for NGFS did not respond immediately for comment.

While the Fed has made preliminary analyses and reports regarding climate change, Chair Jerome Powell insists its role is limited, stating that climate policy should be handled by Congress.

Republicans in Congress have shown skepticism towards climate risk regulations in banking. Also on Friday, the Bank of Montreal announced its exit from the Net-Zero Banking Alliance, following a trend among U.S. banks to step away from such groups.