Stockholm (NordSIP) – On January 17th, in a short press release, the Federal Reserve Board of the USA, the body overseeing the country’s central bank, announced it was leaving the Network for the Greening the Financial System (NGFS). The NGFS brings together 143 central banks and supervisors and 21 observers and was launched at the Paris One Planet Summit on 12th December 2017.
It is a voluntary group of central banks and supervisors sharing best practices and contributing to the development of environment and climate risk management in the financial sector, and to mobilising mainstream finance to support the transition toward a sustainable economy.
The Fed’s announcement could be seen as one of the many changes occurring in the USA as a reaction to the (then upcoming) swearing-in of Donald Trump as the 47th President of the USA on January 20th. However, the US central bank chose to highlight legal conflicts between the increasing scope of NGFS and its own mandate.
“The Federal Reserve Board on Friday announced it has withdrawn from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). 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 Federal Reserve Board announced in a press release. It was not immediately clear which specific issues the Fed’s Board was taking issue on this occasion.
In its reaction, the NGFS highlighted the fact the Fed was not leading any of its committees or workstreams. “The NGFS takes note of the withdrawal of the US Federal Reserve Board from its membership. The NGFS regrets but respects this decision to leave its ‘coalition of the willing’. The Fed was the 96th member to join the Network, three years after the NGFS was established. The Fed was not a member of the NGFS Steering Committee, nor leading any workstream,” the NGFS said in reaction to the Fed’s announcement.
“I naturally regret the Federal Reserve’s withdrawal from the NGFS, especially given the critical importance of addressing climate-related risks. However, I respect its decision. Our network does a tremendous job of highlighting the various economic and financial risks posed by climate change. Our expertise is widely used by the G20 and other international forums. The NGFS pursues a science- and data-based approach, and it is up to our more than 140 members to decide how they use the work of the NGFS, within their respective mandates,” Sabine Mauderer, Deutsche Bundesbank First Deputy Governor and Chair of the NGFS commented on Linkedin post.