The G20's financial watchdog has paused new climate-related policy work due to divisions among members, especially after the US backed out of key climate efforts. Critics say this weakens global cooperation on climate risks.
The Financial Stability Board (FSB), which helps the G20 monitor and guide financial systems, has decided to stop adding new climate change policies for now. This comes after growing disagreements among member countries, especially because the United States has pulled back from climate efforts.
The FSB had earlier promised to fill the gaps in global financial rules that deal with climate risks. But now, it says there are mixed views on whether more action is needed.
Why did the FSB pause its climate work?
In a new report, the FSB said many members still support more climate work. But some feel the group has already done enough.
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The divide became clear during recent discussions, where the US made it clear that climate should only be a focus if there is clear proof that it causes financial risks.
Since President Donald Trump began his second term, the US has stepped back from many climate-related roles. It has pulled out of the Paris Agreement again and also left the Network for Greening the Financial System (NGFS), which is a group of central banks that work on climate issues.
What the FSB will do instead
Even though the FSB will no longer lead new climate rules, it will still talk about climate-related topics once a year. It will also focus on:
- Coordinating work across countries
- Sharing information
- Studying how climate events may affect the economy
- Engaging with outside experts
The FSB said it may take on small projects in the future. But for now, major policy changes will stop.
Some work still continues
The FSB also mentioned that work on climate risks is still happening in many of its member countries. Regulators are still studying:
- Physical climate risks, like floods or droughts
- How well insurance systems cover these risks
- How to prepare for future shocks to the economy
Earlier in 2025, the FSB had released a guide to help countries spot climate-related threats to financial stability. It had also warned that risks from damage to nature, like deforestation, were being ignored by many regulators.
Experts raise concerns
Not everyone is happy with this pause.
Julia Symon, who leads research at the group Finance Watch, said the FSB is stepping away from its promise. She said:
“Unlike other financial risks, climate risk is not cyclical; it is cumulative and irreversible. But the FSB is closing the door on a timely and coherent global regulatory response.”
She also pointed out that the FSB’s new plan does not mention any solid regulatory tools to handle the crisis.
Symon warned that moving the climate work to the NGFS is not enough because NGFS is voluntary. It has no power to make countries follow rules.
A sign of deeper global divisions
The report was given to G20 finance ministers and central bank governors at their July 2025 meeting in South Africa. The US did not send Treasury Secretary Scott Bessent to the meeting.
This retreat comes as the US is set to lead the G20 next year. But with its current stand, hopes for strong climate-finance plans are fading.
Critics say the pause in FSB action shows how global teamwork is breaking down. As the world faces more extreme weather and financial risks linked to climate change, experts warn that delays now could cost more later.
With the FSB stepping back and the US pulling away, the road to global financial protection against climate change just got a lot harder and possibly more dangerous.
