Since Donald Trump's presidency, U.S. regulators have called on global financial rulers to downgrade a flagship program to deal with the latest signs of the U.S. retreat from environmental reasons to address the risks of climate change.
Senior officials of U.S. financial regulators are seeking to undermine the power of the senior task force formed in 2020 to examine the Basel Banking Oversight Committee’s climate change risks to the financial system, a standard-setting player in global financial regulation.
According to three three people covering the matter, the proposal to dilute the Basel Committee task force is on the agenda of the world's top central bank governors and financial directors meeting held on Monday.
The move comes as the Trump administration takes steps to force all the U.S. government weapons, as well as international agencies such as the World Bank and the International Monetary Fund, to abandon attention to climate-related issues.
According to reports from two people on the matter, four Basel committee regulators - the Federal Reserve, the New York Federal Reserve, the Office of the Currency Auditor and the Federal Deposit Insurance Company - called for the demotion of the task force to the task force.
Some central banks at the meeting may object to the U.S.-backed proposal, one familiar with Monday's meeting said. "It is not clear whether there is enough support to pass it," the person said.
The European Central Bank and the Bank of England have recently called on the banks they oversee to strengthen their efforts to address climate risks, and Europe's regulators are likely to be among the defending task force.
The project, co-chaired by Kevin Stiroh, a senior Fed official in New York, is currently seconded to the Fed Commission in Washington and leads its Climate Oversight Committee, as well as Frank Elderson, a member of the Executive Committee of the European Central Bank.
Since its inception five years ago, the agency has made numerous reports, including a proposal for a global framework for disclosing climate risks for banks, and a set of principles for banks and their supervisors to address the threat of global warming.
If the Basel Council dilutes the importance of its flagship climate project, it is likely to cause a commotion among environmental groups.
"This is the worst time to make a mistake," said Benoît Lallemand, Secretary General of Financial Observation of Hall Group.
"The dissolution of the Basel Council's climate task force will send a ridiculous signal that climate risk is no longer a concern for financial stability, just like extreme weather, credit losses and assets are accelerating again," he added. "This return decision will undermine the credibility of BCB and its role as a standard-maker."
In January, the Fed left the network greening financial system, a central bank club that studies the climate risks contained in Banque de France. Federal Reserve Chairman Jay Powell denied at the time that the decision reflected the Trump administration’s position on climate issues, saying it was “really not politically driven.”
Kevin Warsh, considered one of the leaders in Powell's succession after his term ended in May 2026, attacked the U.S. central bank involvement in issues such as climate change and inclusion, although he admitted it has now "changed its tune" by NGFS leaving the NGF in January.
Asked this week whether the Fed should focus on climate change, Powell distanced himself from the topic and said “the role in climate is a very, very narrow role.”
"For us, it's a real danger to take such a mandate, and it has a narrow application to our work," the Fed chairman said. "If you do something that really doesn't fit the task... then why are you independent?"
The Basel Committee, the Federal Reserve, the OCC, the Fed and the New York Fed declined to comment on Monday's meeting.
The Fed also made recommendations on bank capital requirements on its so-called Basel III Doomsday proposal based on rules agreed at the Basel Committee a decade ago.
U.S. lenders believe the original proposal is too harsh and threatens to sue the Fed to push them to put it down. Michael Barr, the Fed's vice chairman of banking supervision, has since resigned from the board of directors. Barr was recently replaced by Michelle Bowman, who is expected to issue strict guidelines soon.