US Federal Banking Regulators Withdraw Climate Risk Management Principles

US federal banking regulators, including the Federal Reserve, FDIC, and OCC, have withdrawn the 2023 Principles for Climate-Related Financial Risk Management for large financial institutions, citing that existing risk management standards already address material financial risks, including climate-related ones. This decision, effective immediately, reverses the prior effort to establish uniform climate risk guidelines and reflects a regulatory shift under President Donald Trump's administration, which critics say downplays climate change risks to the financial system. Federal Reserve Governor Michael Barr dissented, warning the withdrawal increases financial system risks amid growing climate-related threats, while advocates argue the move ignores scientific realities and hampers preparedness for climate disasters. Regulators maintain that banks should continue to manage all material risks within existing frameworks without separate climate-specific rules, emphasizing resilience to a broad range of risks. The withdrawal also follows the agencies' exit from international climate finance coalitions, signaling a retreat from global climate risk collaborations. This regulatory shift has sparked debate between those prioritizing national sovereignty and financial industry autonomy and those advocating for more robust climate risk oversight to safeguard economic stability.