World's financial stability could be endangered by the United States pushing for less stringent climate change regulations, according to experts' warnings.

The United States' withdrawal from agreements such as the Paris Agreement and the Network for Greening the Financial System has raised concerns about Environmental, Social, and Governance (ESG) risks for insurers, according to the European Insurance and Occupational Pensions Authority.

This decision could have far-reaching implications, with other states considering passing similar legislation to California's climate disclosure rule. California's rule, which could impact many large US companies, is designed to increase transparency about a company's climate-related risks and opportunities.

The US's withdrawal from these agreements and climate groups could increase associated risks. Critics, including France, Canada, South Africa, the Netherlands, and various central bankers and finance ministries, have criticised the US's stance on climate change.

Reduced regulatory oversight signals to banks that climate risk doesn't matter, potentially leading to less funding, less data, and a reduced perception of actual risks. This could create a feedback loop, with banks backing out of net-zero commitments, leading to more emissions, more damage to communities, and more climate-related financial risk.

The US could end up hurting the most from pulling away from transitioning to a net-zero economy, as it cedes its opportunity to be a leader on renewables. In the absence of global cooperation, Europe may not align with the least ambitious policies, but instead build coalitions with countries like Canada, China, Japan, India, or Brazil.

Jérôme Crugnola-Humbert suggests that only full international cooperation on climate action could slow down, stop, and ultimately reverse the build-up of physical climate risks. The Basel Committee's guidelines on climate-related financial disclosures are voluntary rather than mandatory due to US pressure.

However, it's worth noting that larger US banks are preparing for climate change, despite the Trump administration's stance. The Basel Committee on Banking Supervision initially faced pressure from the US to drop its work on climate change mitigation, but this was largely rejected.

The US's influence on global climate negotiations is waning during Trump's second administration. In the meantime, Germany has taken a leadership role in implementing regulations for climate change risk management in 2025, following the USA's withdrawal from the Paris Agreement and other climate groups.

Insurance losses from natural disasters are expected to hit US$145bn in 2025. The US's withdrawal from the World Health Organization and climate agreements could lead to larger losses from extreme pandemics and natural catastrophes, making insurance unsustainable for the industry.

The US push for an anti-climate agenda has been increasingly rejected by other nations. The federal government has even sued some states for their climate rules, creating further complications. Despite these challenges, the push for climate action continues, with Europe and other nations taking the lead in shaping the future of a sustainable global economy.

World's financial stability could be endangered by the United States pushing for less stringent climate change regulations, according to experts' warnings.