The Federal Reserve has withdrawn from a network of global financial regulators focused on climate risk days before President-elect Donald J. Trump returns to power.
The central bank announced that it was formally joining the network in December 2020, shortly after President Biden was elected. The decision was met with praise from Democrats and skepticism from Republicans, who worried that increased attention to climate risk by financial regulators could have harmful impacts on American bank customers.
The group, known as the Network of Central Banks and Supervisors for Greening the Financial System, exists to help central banks and other regulators exchange ideas and research as they figure out how to account for climate-related risks in the financial sector. The network also aims to “mobilize mainstream finance to support the transition toward a sustainable economy.”
Fed officials said the decision to leave the network came after the group’s work had broadened.
“While the Board has appreciated the engagement with the N.G.F.S. and its members, the work of the N.G.F.S. has increasingly broadened in scope, covering a wider range of issues that are outside of the Board’s statutory mandate,” the Federal Reserve said in a statement on Friday.
The network did not immediately respond to a request for comment.
Five members of the Fed’s Board of Governors voted to withdraw from the network, including Fed Chair Jerome H. Powell. Two members abstained, including Adriana Kugler and Michael Barr, who recently announced that he would step down from his role as vice chair for supervision by Feb. 28.
The central bank’s move to join the network was a seen as a sign of its recognition that the Fed had to begin taking into account the impact of extreme weather events as they occur more frequently and pose a greater risk to the financial system. The Fed had been participating in the network informally for more than a year before it officially joined.
Days before the Fed formally became a member, a group of Republican lawmakers expressed skepticism about the Fed’s involvement with the network. Its recommendations “could significantly limit access to capital for crucial industries and place harmful restrictions on regulated entities,” the Republican lawmakers wrote in a letter to Fed officials in December 2020.
