World experts caution that relaxed climate rules advocated by the US could elevate the global financial danger.

The US's influence on global climate negotiations has been experiencing a significant shift under President Trump's second administration. The waning of US influence is evident in various international forums, as voluntary rather than mandatory guidelines have been published due to US pressure.

This change in approach has raised concerns about the future of global climate action. The US's withdrawal from climate agreements such as the Paris Agreement and the Network for Greening the Financial System has been met with criticism from France, Canada, South Africa, the Netherlands, and other central bankers and finance ministries.

The US's stance on climate change has also become a partisan issue, with some states taking matters into their own hands. California's climate disclosure rule, for instance, could impact many large US companies, and other states are considering passing similar legislation. However, the federal government's opposition to these state-level initiatives has created further complications.

The lack of federal regulation has also resulted in gaps in nationwide information, making it difficult to see trends in climate-related risks. This is particularly concerning for larger US banks, which are preparing for climate change but may not be able to fill the gap left by federal regulators.

The reduced regulatory oversight has also signalled to banks that climate risk doesn't matter, which could lead to less funding, less data, and a reduced perception of the actual risks. This could create a feedback loop or a "climate-related doom loop," leading to more emissions, more climate change, and more damage to communities and the mortgage markets.

In contrast, the EU's proposed omnibus regulation could jeopardize its broader sustainability objectives due to pressure to be more competitive with the US. However, absent global cooperation, the best course of action available to Europe may not be to align with the least ambitious policies, but more coalition-building with other countries like Canada, China, Japan, India, or Brazil.

In 2025, John K. Hurley, the Under Secretary of the Treasury for Terrorism and Financial Intelligence, publicly addressed issues related to climate risk discussions in this role. His stance underscores the growing recognition of climate change and climate-related financial risk as critical issues that require urgent attention.

The Fed's membership in the Network for Greening the Financial System, which it joined right before Joe Biden took office and left soon after Donald Trump was elected, indicates a response to political winds. This suggests that the US's stance on climate change may be more influenced by political factors than by scientific evidence and long-term economic interests.

The US's push for an anti-climate agenda has been increasingly rejected by other nations. The US's withdrawal from climate agreements increases associated risks and could ultimately hurt the US the most from pulling away from transitioning to a net-zero economy. Only full international cooperation on climate action might slow down, stop, and ultimately reverse the build-up of physical climate risks.

World experts caution that relaxed climate rules advocated by the US could elevate the global financial danger.