Roundup: US stance on climate risk sparks heated debate at FSB meeting

The US faces international backlash for its climate risk stance during the FSB’s annual plenary meeting, whilst the SEC’s decision to drop ESG rules placing it at odds with European and Asian central banks seeking to strengthen green finance.

FSB climate clash during annual meeting

Heated clashes over climate risk forced the temporary suspension of the Financial Stability Board’s annual plenary last week. The meeting saw central bankers and top finance ministers exchange heated words over the US’s increasingly obstructive climate stance on the international stage, according to Bloomberg sources.

The disruption occurred when Michael Kaplan, US Treasury interim undersecretary, insisted during the private talks that climate should only be an FSB focus if there is proof of imminent financial stability risk. His statements drew immediate pushback from officials across the board, according to the Bloomberg report.

Both Francois Villeroy de Galhau, governor of Banque de France, Joost Smits of the Dutch finance ministry countered by citing climate’s mounting economic costs, and Canada’s Peter Routledge highlighted wildfire threats to major cities. Officials from the UK, Germany, Japan and South Africa also voiced disagreement.

It was also reported that Kaplan attempted to strip climate references from the FSB’s post-meeting press release. However, the final version confirmed the FSB’s commitment to continue evaluating physical risks and insurance gaps.

SEC abandons ESG fund disclosure rules

The Securities and Exchange Commission (SEC) has withdrawn proposed rules requiring enhanced ESG disclosures from investment advisers and fund managers, marking the end of a major Biden-era regulatory initiative aimed at combating greenwashing.

The rules that would have required ESG-focused funds to report on emissions under scopes 1, 2 and 3. Additionally, they would have mandated such firms provide standardised ESG information and detail their impact goals.

“The Commission does not intend to issue final rules with respect to these proposals,” the SEC stated. The anti-greenwashing rule, first proposed in May 2022 under former chair Gary Gensler, was designed to address a lack of consistent ESG data which makes it difficult for investors to make informed decisions.

The withdrawal follows mounting Republican pressure, with House lawmakers previously asking the SEC to rescind both the ESG rule as well as the names rule which aims to reduce the use of misleading fund names. “Investors should be able to drill down to see what’s under the hood of these strategies,” Gensler said when the regulations were first proposed.

Enforcement of the Names rule has been pushed back to 2026.

Singapore highlights green finance opportunities in China-Asean ties

The Monetary Authority of Singapore (MAS) leadership emphasised the growing importance of green finance in strengthening economic ties between China and Asean during a recent conference.

At the China-Singapore Connectivity Initiative (CCI)Trade and Financial Conference, Leong Sing Chiong, MAS deputy managing director, said that both regions require “vast amounts of green financing and investments to transition our economies towards a sustainable, low carbon future”,

The conference marked the 10th anniversary of the CCI, a decade which has seen US$21.69bn in cross-border financing deals have been made between China and Singapore. Leong noted that financial institutions from both sides are actively exploring new partnership opportunities and that advances in the multi-jurisdiction common ground taxonomy will make it “easier to access cross border green financing”.

ECB climate chief stands firm on climate risk policies

The European Central Bank’s (ECB) head of climate policy has made clear that Europe’s climate risk regulations will not be derailed by the Trump administration’s opposition to ESG policies, despite mounting US pressure.

“We always go back to our mandate,” Irene Heemskerk, head of the ECB’s Climate Change Centre, told Bloomberg. “We see climate and environmental risk — regardless of any political wind that goes around — as relevant for banks to manage.” In a recent interview with Green Central Banking, Heemskerk also clarified that the ECB has no plans to withdraw from the NGFS or scale back its climate work: “The ECB is there and the ECB is there to stay”.

Heemskerk’s recent comments come as the Trump administration has deployed what she called “trade tools” to fight environmental requirements affecting American companies, with Commerce Secretary Howard Lutnick threatening retaliation against European ESG rules.

She emphasised that the market demand for ESG data will continue regardless of political opposition. “Banks — or any financial market participants — would need to know it anyway,” she said.

CPI launches climate finance reform tracker

The Climate Policy Initiative has launched its Climate Finance Reform Compass, an interactive tool designed to bring structure and accountability to the fragmented climate finance landscape.

As the official accountability tracker of the Global Climate Finance Framework agreed at Cop28, the Compass monitors 32 topics across nine themes, from the New Collective Quantified Goal on climate finance to multilateral development bank reforms.

Research highlights

Speeches in the Green: The Political Discourse of Green Central Banking
New research from researchers at the Vienna School of International Studies has revealed that international “peer pressure” and governmental climate policies are key factors determining how much central banks discuss green issues publicly. The analysis shows that membership of the NGFS significantly increases climate communication, as does the extent of central bank independence and average temperatures. However, whether a central bank has an explicit sustainability mandate does not.

The Climate-Changing Context of Inflation: Fossilflation, Climateflation, and the Environmental Politics of Green Central Banks
In this paper, James Jackson, Hallsworth Research Fellow at the University of Manchester, highlights how climate change is reshaping inflation, urging environmental politics scholars to explore this emerging nexus. The article considers the concepts of fossilflation – the inflationary legacy of fossil fuel dependence – and climateflation, as well as the price pressures from natural disasters and extreme weather. By challenging traditional views of inflation, the study calls for interdisciplinary dialogue on how climate-driven price shocks complicate central banking’s green transition.