Dive Brief:
- The U.S. Treasury Department announced Thursday its Federal Insurance Office was withdrawing from the Network of Central Banks and Supervisors for Greening the Financial System, a global coalition that aims to mobilize green finance and develop recommendations for climate-risk management in the financial sector.
- The Treasury said in a Jan. 30 statement that the departure from NGFS is “one part of implementing President Trump’s Executive Orders Putting America First in International Environmental Agreements and Unleashing American Energy.” Trump signed both orders on his first day in office, in addition to a flurry of others that signaled a reversal on the nation’s federal climate policy.
- The Treasury department said the climate group’s initiatives were “inconsistent” with the new administration’s priorities and its scope of work, including NGFS’ frameworks on monetary policy, “go beyond FIO’s core duties.”
Dive Insight:
Trump signed a spate of executive orders on Jan. 20, including some at a post-inauguration rally. Orders to withdraw the U.S. from the Paris Agreement, again; declare a national “energy emergency;” pause all wind power development; and suspend all funding disbursements related to the Inflation Reduction Act and the Bipartisan Infrastructure Law were all signed on day one.
The “Putting America First in International Environmental Agreements” order — which directs the U.S. to depart from the global climate treaty — also revoked and rescinded the U.S. International Climate Finance plan and directed the government to find any related financing. The “Unleashing American Energy” order directed the exploration and production of non-fuel minerals on federal lands and waters, including the outer continental shelf. The order also included a government directive to explore ways to “expedite and simplify” the permitting process.
“It’s deeply concerning that after only two weeks under Trump, the [Treasury’s] Federal Insurance Office is now retreating from an international body specifically dedicated to addressing climate-related financial risks,” Carly Fabian, a senior insurance policy advocate with Public Citizen’s Climate Program, said in emailed comments to ESG Dive.
Fabian’s comments were echoed by Kyle Herrig, a spokesperson for pro-ESG 501(c)4 Unlocking America’s Future. Herrig said Trump’s Treasury Secretary Scott Bessent’s first act in his new role is a “reckless abdication of responsibility that puts America’s economy at risk.” Bessent was sworn in as the 79th Secretary of Treasury Department on Jan. 28.
“Walking away from international cooperation on climate risk won’t make the problem disappear — it only leaves the U.S. less prepared for economic disruptions driven by extreme weather, insurance market instability, and energy transition challenges,” Herrig said.
The Treasury said its Federal Insurance Office would “continue to engage with state insurance regulators and other stakeholders to promote U.S. interests in international insurance engagements” in its Jan. 30 statement announcing the exit.
The U.S. Treasury joined NGFS in February 2022, under former President Joe Biden’s administration, which broadly sought to introduce a climate-friendly federal posture through legislation and regulations.
The Treasury’s departure came a few days after the U.S. Federal Reserve Board and the Federal Deposit Insurance Corporation announced their own withdrawals from NGFS. Both exits happened around the time of Trump’s inauguration.
NGFS was established in 2017 with the aim of incorporating climate change and related risks into the financial agenda of global central banks and supervising bodies. As of December, the group’s membership included 144 central banks or prudential supervisory authorities across 90 countries. NGFS’s membership count covers 100% of global systemic banks and 80% of the internationally active insurance groups, per its website.