US regulators have urged global financial rulers to downgrade their flagship projects to tackle the risks of climate change in the latest signs of America’s retreat from environmental causes since Donald Trump became president.
The top US Financial Watchdog officials are trying to undermine the power of the high-level task force established in 2020 and look into the risks of climate change to the financial system by the Basel Committee on Banking Supervision, the standard setter for global financial regulations.
According to three people who were described on the issue, the proposal to dilute the Basel Committee’s task force is on the agenda of a meeting of top central bank governors and financial supervisors around the world on Monday.
This move comes as the Trump administration, along with international organisations such as the World Bank and the IMF, took steps to enforce all the U.S. government arms to focus on climate-related issues.
Two people who have explained the issue say that the four U.S. regulators on the Basel Commission — the Fed, New York Fed, the Secretary of Currency and the Federal Deposit Insurance Corporation — are calling for a downgrade to the working group.
According to one person familiar with Monday’s meeting, the conference’s central bankers are likely to oppose the US-backed proposal. “It’s not clear if there’s enough support to pass it on,” the person said.
The European-based regulator is likely one of those defending the task force after both the European Central Bank and the Bank of England recently called for banks to oversee efforts to address climate risks.
The project is co-chaired by Kevin Staro, a senior New York official who is currently seconded to the Federal Reserve Committee in Washington and heads the Climate Supervisory Committee, and Frank Elderson, a member of the European Central Bank’s Executive Committee.
Since being set up five years ago, the body has produced numerous reports that include proposals for banks to establish a global framework for disclosing climate risks, and a set of principles for banks and their supervisors to tackle the threats from global warming.
If the Basel Committee is diluting the importance of the flagship climate project, it could spur a stir among environmental groups.
“It’s the wrong move at the worst times,” said Benaud Laremand, executive director of Robbie Group Finance Watch.
“The dissolution of the Basel Commission’s Climate Task Force will send an absurd signal that climate risks are no longer a concern of financial stability, just as extreme weather, credit losses and asset relics accelerate,” he added. “This regressive decision will undermine the reliability and role of the BCB as a standard setter.”
In January, the Fed left its network to green the financial system, a central bank club that investigates climate risks that the Bank of France houses. Federal Reserve Chairman Jay Powell denied that the decision reflects the Trump administration’s stance on climate issues, saying it was “really not driven by politics.”
Kevin Warsh is considered one of the frontrunners to replace Powell after his term as a Fed chair ended in May 2026, attacking the US Central Bank’s involvement in issues such as climate change and inclusion last month.
Asked this week if the Fed should focus on climate change, Powell distanced himself from the subject by saying, “Its role on climate is very narrow.”
“It is a real risk for us to take on such a mission. It has (a) a very narrow application to our work,” the Fed chair said. “If you really want something that doesn’t belong to your mission.. So why are you independent?”
The Basel Committee, the Fed, OCC, FDIC and the New York Fed declined to comment on Monday’s meeting.
The Fed is also under pressure from US banks over the so-called Basel III endgame proposal on bank capital requirements, based on the global regulatory authority of the rules agreed to by the Basel Commission a decade ago.
The US lender believed the original proposals were too harsh and threatened to sue the Fed and urged them to drop them. Michael Burr, the Federal Reserve vice-chair for banking supervision, later resigned from the role while serving as its executive. The bar was recently replaced by Michelle Bowman. Michelle Bowman is expected to release more strict guidelines soon.
