FSB roadmap veers off course, undermining G20 climate commitments

14 July 2025 - 13:08 h

Media Alert

The Financial Stability Board (FSB) has today published its progress report on the roadmap for addressing climate-related financial risks. Just weeks after a behind-the-scenes clash at its plenary in Madrid, the progress report falls dramatically short of the G20’s original ambition on regulatory action.

The Financial Stability Board was established in response to the 2008 financial crisis to coordinate efforts on systemic risk and prevent future crises. Today, climate change is a systemic threat. In 2021, the G20 recognised this and mandated the FSB to coordinate a globally consistent regulatory response. Today’s report is the second one to outline the progress since then.

The FSB’s latest roadmap has veered off course. The report contains no reference to macroprudential tools, nor future regulatory or supervisory measures, despite prior commitments to assess and address gaps in the global prudential framework. It fails to reaffirm the goal of regulatory convergence and a timely response to the systemic risk of climate change, retreating instead to a narrow focus on physical risks and insurance coverage. The work on transition plans is now planned to be carried forward by the NGFS, which relies on voluntary cooperation and does not have a formal mandate as a standard-setter.

Julia Symon, Head of Research and Advocacy

The systemic risks from climate change are not hypothetical. Insurance markets are buckling, mortgages are turning to stranded assets, banks are retreating from high-risk areas, and asset prices are shifting beneath our feet. These are not distant warnings. They are the early tremors of a systemic shock. Climate science tells us that we will not be able to adapt to climate change at scale unless coordinated mitigating actions are launched. But now, under pressure from powerful jurisdictions, the FSB has reduced its focus to soft measures like voluntary coordination, information sharing and capacity building.

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. If the G20 endorses this shift, we risk locking in a fragmented response. That weakens incentives for lagging jurisdictions, reduces multilateral pressure to act, and sidelines the possibility of preventing the next financial crisis.

Julia Symon, Head of Research and Advocacy

This is a moment of multilateral backsliding. In Madrid, a U.S. Treasury official reportedly called for “proof of imminent financial instability” before acting, a demand that all but guarantees shocks will go uncontained. Pressure from powerful jurisdictions is mounting and the FSB is bending to it. But climate change does not respect borders, and neither do the financial risks it creates.

We are wintessing the limits of global cooperation mechanisms such as FSB and BCBS. Against a background of geopolitical tensions and short-term political considerations driving national agendas, the resulting regulatory race-to-the-bottom jeopardises our ability to prevent global crises. Yet, with climate change, this time will truly be different.

Julia Symon, Head of research and Advocacy