The push to roll back climate finance rules in the US has gained momentum. Top regulators now say banks and financial firms should focus more on regular business risks than on climate concerns. This marks a big shift in how America’s money world deals with environmental issues.
Just a few years ago, everyone was talking about how climate change might hurt banks and investors. People worried about things like floods damaging property or oil companies losing value as clean energy grew. The government started making rules to help prepare for these problems.
Now the wind is blowing in a different direction. The Office of the Comptroller of the Currency (OCC) has changed its tune. This important agency watches over America’s biggest banks. They recently told banks that climate shouldn’t get special treatment when thinking about risks.
“Banks should just focus on actual risks to their business, whatever those might be,” said an OCC official who didn’t want to be named. “Sometimes climate matters, sometimes it doesn’t.”
This change comes as many Republican states have fought against what they call “woke banking.” These states, like Texas and Florida, don’t want financial companies considering climate change in their decisions. Some have even pulled their money from firms they think care too much about environmental issues.
The Securities and Exchange Commission (SEC) has also backed down a bit. They wanted companies to share lots of information about how climate change affects them. Their final rules turned out much softer than first planned after facing strong opposition.
Financial firms find themselves caught in the middle of a political tug-of-war. On one side, environmental groups want them to help fight climate change. On the other, conservative politicians threaten punishment if they do too much.
“It’s become nearly impossible to please everyone,” said Maria Thompson, a climate finance expert at Georgetown University. “Companies are trying to walk a very thin line.”
Some banks have quietly scaled back their climate teams. Others have stopped talking publicly about their environmental goals. Even Wall Street giants that made big promises about going “net zero” are now keeping a lower profile on these topics.
The Federal Reserve has also changed its approach. While they still study how climate might affect financial stability, they’ve made clear they won’t tell banks how to run their loan business based on environmental concerns.
“Our job is making sure banks stay healthy, not directing the economy toward specific climate goals,” said Fed Governor Christopher Waller in a recent speech.
Europe has taken a different path. There, regulators continue pushing ahead with strict climate disclosure rules and “green finance” initiatives. This growing gap between US and European approaches creates headaches for global companies trying to follow different rules in different places.
For ordinary Americans, these changes might seem like distant regulatory battles. But they could affect everything from how much your mortgage costs in flood-prone areas to whether your retirement investments include oil companies.
Some experts worry the pendulum has swung too far. “Just because climate rules became politically charged doesn’t make climate risk any less real,” noted Jennifer Harris from the Climate Risk Research Institute. “Pretending these financial risks don’t exist won’t make them go away.”
Others welcome the shift. “Banks should make decisions based on dollars and cents, not politics,” said Thomas Wilson, an economist at the American Enterprise Institute. “Let markets decide which investments make sense.”
What happens next depends partly on the upcoming elections. A change in who controls the White House or Congress could again reverse course on these issues.
Meanwhile, many financial companies continue their own climate initiatives quietly, focusing on areas where environmental concerns clearly overlap with business risks. They’re just being more careful about how they talk about it.
For now, America’s approach to climate in finance seems to be: proceed with caution, keep it business-focused, and avoid political crossfire whenever possible.
