Dive Brief:

• The Federal Reserve announced Friday it had withdrawn from the Network of Central Banks and Supervisors for Greening the Financial System, a global coalition that aims to mobilize green finance and develop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.
• “While the Board has appreciated the engagement with the NGFS and its members, the work of the NGFS has increasingly broadened in scope, covering a wider range of issues that are outside of the Board's statutory mandate,” the U.S. central bank said in a Jan. 17 statement.
• The Federal Deposit Insurance Corp. followed suit Tuesday, saying it also had withdrawn from the NGFS.

Dive Insight:

The Fed’s departure came a few days before President Donald Trump’s inauguration Monday and follows a wave of notable banks and financial institutions withdrawing from climate-focused coalitions and groups.

The Fed formally joined the NGFS in December 2020, after participating in the group’s discussions and activities for more than a year. At the time, the Fed applauded the group’s role in boosting the “exchange of ideas, research, and best practices on the development of environment and climate risk management for the financial sector.”

“As we develop our understanding of how best to assess the impact of climate change on the financial system, we look forward to continuing and deepening our discussions with our NGFS colleagues from around the world," Fed Chair Jerome Powell said in a statement at the time.

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 last month, 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.

The Fed is no longer listed on NGFS’s membership roster, but the group still counts the Federal Housing Finance Agency, the Federal Insurance Office and the Office of the Comptroller of the Currency as current members.

The Fed’s decision to exit NGFS also comes against a backdrop of Wall Street fleeing climate alliances and groups. Several notable banks have withdrawn memberships from groups that advocate for net-zero status or climate-focused goals in the past few weeks alone. 

Bank of America and Citi announced they were leaving the United Nations-backed Net-Zero Banking Alliance on New Year’s Eve, followed shortly by Morgan Stanley and JPMorgan Chase on Jan. 2 and Jan. 7, respectively. The slew of departures came less than a month after Goldman Sachs and Wells Fargo ended their memberships in the group.