Banking and Finance Law Daily Wrap Up, FINANCIAL STABILITY—GAO reviews U.S. banking agencies’ participation in global climate risk network, (Mar 30, 2026)
Organizations Mentioned:Office of the Comptroller of the Currency
By Shashi Kant, BALLB, LL.M.
The report examines the role of the Fed, OCC, and FDIC in the NGFS climate risk network, and highlights limits on supervisory use of climate-related outputs.
The Government Accountability Office (GAO) released a report examining U.S. banking regulators’ participation in the Network for Greening the Financial System (NGFS), concluding that the Federal Reserve Board, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation used the international forum primarily for information sharing and research collaboration, while emphasizing that NGFS materials do not establish binding supervisory requirements. The report describes the NGFS as a voluntary international network of central banks and financial supervisors focused on climate-related financial risks, including development of scenario analysis, data tools, and research intended to inform risk assessment.
Agencies’ participation focused on research and information sharing. According to GAO, U.S. banking agencies participated in NGFS working groups and contributed to initiatives involving climate scenario analysis, data gaps, and supervisory practices. The agencies used the NGFS as a platform to exchange information with foreign regulators and to monitor emerging approaches to climate-related financial risk. GAO reported that agency officials described NGFS outputs, such as climate scenarios and technical reports, as informational tools rather than regulatory standards. The agencies stated that participation did not create obligations to adopt NGFS recommendations or integrate them directly into supervisory frameworks.
Limits on use of NGFS outputs in supervision. The report emphasizes that U.S. regulators maintained that NGFS materials were not intended to be used as prescriptive supervisory requirements. Instead, agencies indicated that any supervisory expectations related to climate risk would be developed through domestic regulatory processes and consistent with statutory mandates. GAO also noted that agencies faced challenges in applying climate-related scenario analysis, including data limitations, modeling uncertainty, and the long-term nature of climate risks relative to traditional supervisory time horizons.
GAO identifies governance and transparency considerations. GAO found that while the NGFS operates as a collaborative forum, it lacks formal decision-making authority over member agencies. The report notes that participation in such international networks raises considerations regarding transparency, accountability, and clarity about how external materials may influence domestic regulatory approaches. The agencies told GAO that they sought to maintain clear distinctions between international collaboration and U.S. supervisory policy, including through public communications clarifying the nonbinding nature of NGFS outputs.
Participation followed by agency withdrawals in 2025. The GAO report comes against the backdrop of U.S. banking agencies’ withdrawal from the NGFS in early 2025. The Fed and FDIC announced their departures in January 2025, followed by the OCC in February 2025, citing a reassessment of participation in international climate-focused initiatives (see Banking and Finance Law Daily, Jan. 21, 2025, and Feb. 12, 2025). Those withdrawals marked a shift from earlier engagement. The Fed joined the NGFS in 2020, while the OCC and FDIC later became members as part of broader efforts to evaluate climate-related financial risks (see Banking and Finance Law Daily, Dec. 18, 2020, Jul. 28, 2021, and Feb. 7, 2022).
Context of evolving approach to climate-related financial risk. The GAO report situates agency participation in the NGFS within a broader evolution of U.S. regulatory approaches to climate-related financial risk. While agencies engaged in international collaboration to better understand potential risks to financial institutions and markets, they consistently emphasized that supervisory expectations must be grounded in U.S. law and tailored to domestic financial stability objectives. The report does not make formal recommendations but provides an overview of how agencies used NGFS participation to inform their understanding of climate-related risks while maintaining limits on the role of international guidance in U.S. supervision.
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