The Financial Stability Board (FSB), the G20’s financial regulatory arm, has scaled back its climate policy ambitions, despite unveiling a fresh roadmap to assess climate-related financial risks. The move comes as the United States retreats from multiple international groups dedicated to addressing how extreme weather events and climate policies impact global financial stability.
In a report presented to G20 finance ministers during a meeting in South Africa, the FSB acknowledged progress made since the launch of its 2021 climate roadmap. It emphasized improved coordination and data sharing among its members but signaled a halt to any significant new policy initiatives. “While many members feel there is a need for more work, some members feel that the work completed to date is sufficient,” the FSB noted.
The shift marks a substantial change in tone from earlier ambitions, raising concerns among climate advocates and financial reformists. While climate-linked vulnerabilities will still be considered annually in the FSB’s work programme, no new commitments were made to integrate these risks into regulatory frameworks across member states.
The FSB’s pause comes at a critical moment, as climate shocks like floods, wildfires, and prolonged heatwaves increasingly pose systemic financial threats. The decision also reflects growing geopolitical tensions, particularly as the United States, which will chair the G20 next year, declines deeper involvement in international climate finance groups. US Treasury Secretary Scott Bessent was notably absent from the South Africa meeting.
Brussels-based think tank Finance Watch sharply criticized the FSB’s backtrack, calling it a moment of “multilateral backsliding.” Julia Symon, the group’s head of research and advocacy, warned that without strong international leadership, the G20 risks locking in a fragmented global response to climate risks. “That weakens incentives for lagging jurisdictions and reduces multilateral pressure to act,” she said.
Earlier this year, the FSB examined the value of transition plans and compiled findings on nature-related financial risks. However, future work on these fronts will now depend on annual agenda reviews, leaving stakeholders uncertain about next steps.
The latest FSB report outlined progress made in delivering forward-looking data to help financial institutions assess losses from climate disruptions, but its reluctance to push for regulatory reform leaves open questions about how prepared global markets are for escalating environmental threats.