The G20’s financial watchdog has paused integrating any further climate change policy initiatives into its supervisory and regulatory work as member countries are divided amid a US retreat from green initiatives, despite the group’s previous commitment to addressing regulatory gaps.
In a report on its medium-term approach to climate-related financial risks, the Financial Stability Board (FSB) said there was a “wide range of views” on how to approach such risks.
“While many members feel there is a need for more work, some members feel that the work completed to date is sufficient”.
The announcement comes just weeks after reports that discussions during an FSB meeting became heated after the US Treasury’s interim undersecretary for international affairs said climate should only be a focus if there’s proof of imminent financial risk.
Since Donald Trump started his second term as president, the US has withdrawn from several climate initiatives, including the Paris Agreement. Meanwhile, the Federal Reserve has left the Network for Greening the Financial System (NGFS), a central bank climate group.
The FSB noted that potential climate-related projects would only be considered yearly and would “make determinations about what projects, if any, it will undertake.” Some of those potential initiatives could include efforts like information sharing, vulnerability analysis, and supervisory and regulatory work.
However, work on these topics is continuing in many member countries, the FSB said.
FSB pause highlights limits of global cooperation
Critics say the FSB has veered off course.
“Unlike other financial risks, climate risk is not cyclical; it is cumulative and irreversible. But the FSB is closing the door on a timely and coherent global regulatory response,” said Julia Symon, head of research and advocacy at Finance Watch.
The report does not reference macroprudential tools; instead, it focuses on physical risks and insurance coverage. It includes detailed progress made since 2023 by global standard setters and regulators like the Basel Committee.
Earlier this year, the FSB released a forward-looking framework for assessing climate-related vulnerabilities to identify potential climate shocks in the financial and economic systems. And in 2024, it warned that regulators are overlooking nature-related risks.
The FSB’s retreat shows the limitations of global cooperation initiatives, Symon added, and geopolitical tensions jeopardise efforts to prevent a global crisis.
“The work on transition plans is now planned to be carried forward by the NGFS, which relies on voluntary cooperation and does not have a formal mandate as a standard-setter,” she said.
This page was last updated July 18, 2025
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
