OCC exits Network for Greening Financial System

Bloomberg News

The Office of the Comptroller of the Currency announced Tuesday it had withdrawn from an international body devoted to combatting climate-driven financial risks. Acting Comptroller Rodney Hood said in a statement that the initiative fell outside the OCC's primary mission.

The OCC's departure from the climate body, known as the Network of Central Banks and Supervisors for Greening the Financial System makes it the third and final federal prudential agency to exit the network.

"While severe weather events may be a broader societal concern, they do not fall within the OCC's statutory mandate," Hood said. "Going forward, the OCC's focus must singularly remain on fulfilling our core mission."

The climate change organization was formed in 2017 in what some say was a reaction to the first Trump term's decision to withdraw from the Paris Climate Accord. The NGFS' stated goal was to uphold the Paris Accord's goals of stemming climate change — including by leveraging finance to stem greenhouse gas emissions — as well as study financial risks stemming from climate change. 

Bank regulators' withdrawal from the NGFS marks the beginning of a predicted shift in the agency's approach towards overseeing climate risks in the financial system. 

The Federal Reserve was the first federal prudential regulator to join the climate organization in 2020, followed by the Office of the Comptroller of the Currency in 2021 and the Federal Deposit Insurance Corp. in 2022. 

FDIC

FDIC exits Network for Greening Financial System

January 21, 2025 2:10 PM

The FDIC officially withdrew from the group in January, just days after a similar decision by the Federal Reserve. Regulators like FDIC Acting Chair Travis Hill have talked for some time about deemphasizing climate issues at banking agencies.

Acting Chair Hill in January argued the FDIC's mandate is limited to ensuring the safety and soundness of financial institutions and that environmental issues are outside that purview. Outlining his goals for his tenure as agency head last month, Hill explicitly called for the FDIC's withdrawal from the Network for Greening the Financial System and expressed doubt about the relevance of a proposed Basel Committee framework for climate-related financial risk disclosures. Hill also said he expects the FDIC to resist implementing climate-focused disclosure requirements under new leadership.

Acting Comptroller Hood — the former National Credit Union Administration Chair who took office just days before Tuesday's announcement — spent much of his career in the banking industry prior to entering the regulatory field. 

Hood has little public record on his stances towards the issue of climate change, and has said he sees it as a real issue, but trusted financial firms to manage such risks. 

In his most recent position on the NCUA board, Hood voted to approve a request for information from stakeholders on climate change, but did not commit to advancing additional regulation on the matter. 

"I must say that I certainly believe that climate change is in fact, an important issue, but as of now my view is that credit unions know how to manage mitigating the risk in their respective communities," he said in an April 2023 NCUA board meeting. "I'm indeed open to studying this issue more and would like to see the best policy option prevail."