As Americans celebrate the inauguration of President Donald J. Trump, there is evidence of a massive climate change occurring.
This political climate change proves the Trump Effect continues into the start of his presidency.
The Federal Reserve announced its withdrawal from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS).
The Fed cited the broadening scope of the NGFS’s work as the primary reason for its withdrawal, stating that the network’s activities now cover issues outside the Fed’s statutory mandate.
The decision was approved by five members of the Federal Reserve’s Board of Governors, including Chair Jerome H. Powell, while two members abstained.
The NGFS, formed in 2017, is charged with helping central banks and bank supervisors with integrating risks stemming from climate change into their work steering monetary policy and policing the financial system. A spokesperson for the group did not immediately respond to a request for comment.In recent years, the Fed had taken some steps to integrate climate change into its work via preliminary analysis and reports, but Chair Jerome Powell has repeatedly insisted the Fed has a limited role to play. Powell has maintained the Fed is not responsible for setting climate change policy, and the matter lies in the hands of Congress.Republicans in Congress have been skeptical of any regulatory efforts to police climate risk in the banking sector, and Trump’s impending takeover in Washington has spurred similar exits in the private sector. Also on Friday, Bank of Montreal became the first Canadian bank to announce its exit from the Net-Zero Banking Alliance, a private-sector climate alliance.
Interestingly, Powell said during a 2022 congressional hearing that direct action on climate change could not come from the Fed but rather from Congress and legislation. This is the first direct action taken by that institution that aligns with this stance.
- In a notable speech in 2023, Powell said the Fed would not be a “climate change policymaker.”
- He warned that the Fed should not cross into issues that weren’t directly associated with the mandates assigned by Congress: price stability and full employment.
- Doing so, Powell said, would “undermine the case for our independence.”
This move continues the trend of financial institutions fleeing eco-activist inanity. I recently noted that six major U.S. banks have recently withdrawn from the United Nations-guided Net Zero Banking Alliance (NZBA), a UN-backed coalition of banks committed to aligning their financial activities with net-zero carbon emissions goals by 2050.
Interestingly, Adding to the wave of institutional departures, BlackRock, the world’s largest asset manager, recently withdrew from e international Net Zero Asset Managers (NZAM), which then collapsed.
This coalition aimed to align financial investments with the nebulous goal of achieving net-zero carbon emissions. Yet, BlackRock’s exit reflects a broader reality: these climate initiatives are not only politically fraught but also deeply misaligned with financial performance and client interests.BlackRock faced mounting criticism, especially from Republican-led states in the U.S., for prioritizing environmental, social, and governance (ESG) initiatives over fiduciary responsibilities. Florida, Texas, and other states accused BlackRock of undermining traditional energy industries and pulling resources away from economically viable ventures. Tennessee recently pummelled BlackRock in court. These pressures have created a domino effect, with other institutions also reconsidering their commitments to net-zero coalitions.
One of the heroes in this fight has been Texas Attorney General Ken Paxton. Among other lawsuits he brought to protect Americans (e.g., his case against the Biden administration preventing resource development because of a lizard), he sued BlackRock alongside State Street Corporation and Vanguard Group for “conspiring to artificially constrict the market for coal through anticompetitive trade practices.”
This complaint was joined by the Attorney Generals of Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, West Virginia and Wyoming.A press release from the Texas Attorney General’s Office says: “Blackrock, Vanguard, and State Street utilised the Climate Action 100 and the Net Zero Asset Managers Initiative to signal their mutual intent to reduce the output of thermal coal, which predictably increased the cost of electricity for Americans across the United States.”The lawsuit says that the three asset managers collectively own significant portions of coal producers including Peabody Energy and Arch Resources.Attorney General Paxton said: “Texas will not tolerate the illegal weaponisation of the financial industry in service of a destructive, politicised ‘environmental’ agenda. BlackRock, Vanguard, and State Street formed a cartel to rig the coal market, artificially reduce the energy supply and raise prices.
Paxton must be grateful he can now work with an administration rather than fight it in court.
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