The U.S. Federal Reserve has thwarted a proposal by a global banking watchdog aimed at prioritizing climate risk within financial regulations, according to Bloomberg News sources.
The Basel Committee on Banking Supervision proposed that banks commence detailed reporting on the effects of climate change on their operations from January 2026. This initiative intended to assist investors and regulators in evaluating risk management strategies.
The European Central Bank (ECB) also advocated for the committee to require banks to divulge their plans for meeting climate commitments. However, U.S. officials expressed apprehension, alleging that the watchdog was exceeding its mandate, Bloomberg reported.
Resistance against stringent climate disclosure proposals has been robust among U.S. corporations. Recently, ten Republican-led states contested new federal regulations mandating climate-related risk reporting for U.S.-listed companies.
Critics of stricter climate proposals contend that regulatory bodies prioritize political agendas over prudent financial oversight. Conversely, proponents argue that disclosures are essential for curtailing financing to the fossil fuel sector.
Comprised of central banks and banking regulators, the committee formulates overarching rules for its members. Nonetheless, any agreements forged in Basel necessitate approval from regulators and lawmakers in individual jurisdictions.
The ECB refrained from commenting on the Bloomberg report. Neither the Fed nor the Basel Committee responded immediately to Reuters’ requests for statements.
