Fed blocks tough global climate-risk rules for banks

US regulators, led by the Federal Reserve, have thwarted a push to make climate risk a focus of global financial rules, according to people familiar with the matter.

European central bankers have been advocating for the Basel Committee on Banking Supervision to agree on requiring lenders to disclose their strategies for meeting green commitments. In closed-door meetings, US officials have cited their narrow mandate and concerns that the Basel Committee was overstepping its purpose, some of the people said.

The rift at the committee, which brings together representatives from regulators and central banks around the world to coordinate rules and oversight of lenders, has been particularly pronounced between some officials at the Fed and the European Central Bank, which has been an avid supporter of more stringent climate requirements, the people said.

Spokespeople for the Fed, the Basel Committee and the ECB declined to comment. The details of the private deliberations by the committee are based on conversations with about a half dozen senior officials, who asked not to be identified.

The development coincides with a wider pushback in the US that’s included Republicanled legal attacks against financial firms that factor environmental, social and governance, or ESG, elements into business and investing decisions. At the same time, Fed Chairman Jerome Powell has made clear in public comments that the Fed shouldn’t be mistaken for a “climate policymaker.”

US President Joe Biden’s top financial watchdogs are already facing considerable resistance to major regulatory efforts beyond the thorny issue of climate.