The Financial Stability Board (FSB) a powerful global regulator overseeing financial systems, is facing internal discord just weeks ahead of presenting its climate progress report to the G20. The tension stems from widening disagreements among member central banks and finance ministries over how climate change should be integrated into financial stability frameworks.
As devastating floods in Texas highlight the rising cost of climate-related disasters, the FSB finds itself caught in a storm of its own. The organization has been forced to revise parts of its climate objectives report after member nations raised concerns about the scope and urgency of its recommendations. These revisions expose a growing divide on whether and how aggressively financial policy should confront climate risks.
The clash follows a broader wave of ESG (environmental, social, and governance) backlash that has swept across parts of the EU and the United States. While sustainable investments and social bonds continue to attract interest, the political and cultural resistance to ESG-related measures is mounting, particularly when they impact core economic sectors or challenge traditional financial strategies.
Despite these challenges, the FSB remains under pressure to deliver clear guidance as the world grapples with increasingly frequent and costly climate events. The upcoming G20 summit will now take place under the shadow of uncertainty, with the FSB’s climate commitments under scrutiny and the global financial system’s readiness for climate shocks in question.