(June 17): Top officials from central banks and finance ministries were forced to call a timeout at a meeting of the world’s most powerful financial watchdog last week, amid clashes over the US stance on climate change.

At a June 11 gathering of the Financial Stability Board, officials from France, the Netherlands and Canada voiced dismay after Michael Kaplan, the Treasury’s interim undersecretary for international affairs, said climate should only be a focus if there’s proof of an imminent financial stability risk, according to people familiar with the matter who asked not to be identified discussing private talks.

The comments drew instant pushback, with some officials raising their voices, the people said. That led FSB chair Klaas Knot from the Netherlands to briefly suspend the meeting until those present had cooled down, the people said.

The development marks the latest US attempt to quell international efforts to ensure the finance sector is equipped to deal with the fallout of climate change. It also shows that American officials are increasingly isolated in those efforts, as other countries grow bolder in their opposition to the US agenda.

François Villeroy de Galhau, a member of the European Central Bank Governing Council who’s also the governor of the Bank of France, and Lesetja Kganyago, governor of the South African Reserve Bank, were among those to express the loudest disagreement. Villeroy de Galhau responded to the US position by citing the economic cost of climate change, the people said.

Joost Smits, director of financial markets at the Dutch Ministry of Finance, drew on statistics to underline the economic toll of a hotter planet. And Peter Routledge, superintendent of Canada’s Office of the Superintendent of Financial Institutions, talked about the threat to large Canadian cities posed by wildfires, according to the people familiar with the matter.

The comments were made during a meeting of the FSB’s so-called plenary, its key decision-making body, which had gathered in Madrid to discuss topics, including shadow banking and crypto assets.

The remarks by Kaplan, who isn’t a political appointee, were seen by other attendees as more confrontational than is the norm for such gatherings, the people said. Other members who stated their disagreement with the US position as outlined by Kaplan included regulators from the UK, Germany and Japan, according to one of the people familiar with the matter.

A US Treasury spokesperson declined to comment, citing the confidential nature of the discussions.

Spokespeople for Routledge, Villeroy de Galhau, Smits, Knot and Kganyago declined to comment. A representative for the FSB also declined to comment.

Estimates show that insured losses from natural catastrophes such as floods and wildfires are set to swell to US$145 billion (RM615.38 billion) in 2025, well above the 10-year average. Fitch Ratings recently warned that climate change is affecting risk in the mortgage bond market and the International Monetary Fund has warned that climate change presents a “major threat” to long-term economic growth and wealth.

Kaplan’s comments follow a string of similar US interventions in international assemblies. At the Basel Committee on Banking Supervision, which sets global standards for financial regulation, US regulatory agencies have tried to water down the climate programme, Bloomberg has reported. And US agencies, including the Federal Reserve and Federal Deposit Insurance Corp., have left a global coalition of supervisors engaged in the study of climate risk.

The FSB was founded after the subprime crisis of 2008, with a view to helping identify risks that threaten global financial stability. It has representatives from more than 20 nations, as well as various multinational entities including the IMF, the ECB and the Basel Committee.

During the June 11 meeting, Kaplan questioned the feasibility of the FSB’s medium-term plan to determine the scope of future climate work and tried to pressure the group to drop most references to climate risk from the press release published after the meeting, according to the people familiar. The medium-term plan was supposed to support ongoing work on climate risks, taking into account the progress made on the FSB’s climate objectives since releasing its so-called Roadmap for Addressing Climate-related Financial Risks in 2021, one of the people said.

In the press release that was subsequently published on June 12, the FSB said members “will continue to evaluate how the analysis of topics, such as physical risks and gaps in insurance coverage, may contribute to a better understanding of financial stability risks.”