Global banking regulators have agreed to intensify efforts to understand the financial risks associated with climate change, despite pushback from the United States.
The Bank for International Settlements announced on Monday that the oversight body of the Basel Committee on Banking Supervision will prioritize understanding the financial risks of extreme weather events. This decision comes as regulators worldwide continue to debate how much climate change should influence central bank policy.
In Europe, regulators have focused on addressing climate risks, with the European Central Bank making it a key priority, while in the U.S., such efforts have been reduced or halted. The Basel Committee, which sets international standards for banking regulation, will also release a voluntary framework for climate-related financial risk disclosures for countries to consider.
Although the Basel Committee has no enforcement power, its work influences national regulations. Its approach aligns more closely with European and British regulators, who are integrating climate risks into bank supervision, than with U.S. policy.
The U.S. Federal Reserve has taken steps toward integrating climate risk into its analysis but maintains that its role is limited. Recent actions by U.S. political leaders, including President Donald Trump and climate-skeptic Republicans, have led to a backlash against environmental policies, including those linked to climate risk in the financial system.
In January, the Federal Reserve withdrew from the Network of Central Banks and Supervisors for Greening the Financial System, and the U.S. Treasury Department later pulled out of a set of climate principles for large U.S. banks, calling them overly burdensome.
