A video of security officers wrestling a protester to the floor in the lobby of the Jackson Lake Lodge in Wyoming, outside the Federal Reserve’s most closely watched annual conference, clocked more than a million views.
A protest that disrupted a speech by Jerome H. Powell, the Fed chair, at the Economic Club of New York this fall generated extensive coverage. And when the activists showed up again at Mr. Powell’s speech at the International Monetary Fund in early November, they seemed to get under his skin: The central bank’s usually staid leader was caught on a hot mic using a profanity as he told someone to close the door.
All three upheavals were caused by the same group, Climate Defiance, which a now-30-year-old activist named Michael Greenberg founded in the spring. Mr. Greenberg had long worked in traditional climate advocacy, but he decided that something louder was needed to spur change at institutions like the Fed.
“I realized there was a big need for disruptive direct action,” he explained in an interview. “It just gets so, so, so, so, so much more attention.”
The small but noisy band of protesters dogging the Fed chair is also spotlighting a problem that the central bank has long grappled with: precisely what role it should play in the world’s transition to green energy.
Climate-focused groups often argue that as a regulator of the nation’s largest banks, the Fed should play a major role in preparing the financial system for the damaging effects of climate change. Some want it to more overtly discourage bank lending to fossil fuel companies. Mr. Greenberg, for instance, said he would like the Fed to use regulation to make lending to oil and gas companies essentially cost-prohibitive.
The Fed is unwilling — and, depending on whom you ask, possibly unable — to put such a heavy thumb on the scale. While it polices activity for safety and soundness, central bankers often argue that picking winners and losers by determining whom banks can lend to would go beyond its mandate, throwing the Fed into the political fray and imperiling its independence.
Going so far on climate policy that it causes political backlash could have serious implications for the central bank. Fed officials in Washington are not elected: They are nominated by the president and confirmed by the Senate, and they are difficult to remove from office. That insulation exists so they can make tough decisions that keep the economy operating at an even keel over the long run, sometimes at the politically contentious price of near-term pain.
But Congress oversees the central bank’s actions, and can punish it if it oversteps. To keep its independence and wiggle room, the Fed is trying to strike a balance: paying attention to the possible effects of climate change even as it tries to remain staunchly outside partisan debate.
“They are trying to make progress — and durable progress,” said Sarah Dougherty, a former Atlanta Fed researcher who now focuses on financial regulation and other issues at the Natural Resources Defense Council. “They try to stay out of these larger, culture war, political issues.”
From her perspective, Ms. Dougherty said, the Fed has taken meaningful steps this year to improve climate-related policy and oversight, though she would prefer “more, faster, please.”
But some climate activists argue that by not being more proactive — by taking time to embrace policies that the European Central Bank and the Bank of England have pioneered, for instance — the Fed is slow-walking one of the world’s most important issues.
The Fed is “shamefully” behind its peers, said Eren Can Ileri, who focuses on financial regulation at the Sunrise Project, a group that provides analysis and strategy advice for climate-focused organizers. His work on financial regulation helped direct Climate Defiance’s recent attention to the Fed.
Climate Defiance is not Fed-specific. It blocked entrances to the White House Correspondents’ Dinner. It has shut down or disrupted speeches by top White House climate officials including John Podesta and Ali Zaidi. It upended a book talk by Senator Amy Klobuchar.
But its four full-time staff members and network of protesters have become interested in the central bank because of the Fed’s role in regulating some of the nation’s largest financial institutions.
“The Fed has vast power over the extent to which banks fund the fossil fuel industry,” Mr. Greenberg said. He said that no specific further disruptions were planned, but that more were possible. (Mr. Powell is scheduled to speak Friday at Spelman College in Atlanta, though that is far from Mr. Greenberg’s home turf in Washington, D.C.)
“They clearly haven’t done enough, so they clearly do deserve to be targeted more,” he said.
The protest group has gained some notable supporters. Representative Ro Khanna, a California Democrat, spoke at a recent fund-raiser.
“We need to, whatever the institution is, take climate into account,” Mr. Khanna said in an interview, urging policymakers to “engage with” the organization.
Climate Defiance is not alone in pressuring the Fed on climate issues, and Democrats have long called for the central bank to be more proactive.
The Fed angered lawmakers when it delayed joining a global group of central banks focused on climate-change issues — a step it eventually took in late 2020. Mr. Powell faces regular questions about the central bank’s climate-related activities when he testifies before Congress.
But Republicans have made clear that the Fed should tread carefully, saying it risks overstepping its powers.
In mid-November, a group of House Republicans suggested in a letter that the Fed and other regulators were being influenced by global bodies that were carrying out “a climate-change policy that has been rejected by Congress on numerous occasions,” and warned that “it is the responsibility of Congress, not unelected bureaucrats, to determine policy.”
The partisan divide leaves the Fed in a complicated state of limbo — and may be contributing to its careful approach.
The Fed has taken several major climate-related actions just this year. In early 2023, it announced details for its “pilot climate scenario analysis exercise” for the nation’s six largest banks, asking them to game out how they might handle climate-related shocks. And it set out climate principles that explain how banks should monitor their related risks.
But those efforts are often less toothy than what some overseas counterparts are doing. The Bank of England’s and the European Central Bank’s climate stress tests for banks started earlier and are more developed. Europe’s central bank has also structured some of its monetary policies to favor greener companies.
That owes partly to the central banks’ different structures; the European Central Bank has more authority to tackle climate problems, in some cases. Political reality and the Fed’s innate caution also play a role.
Mr. Powell has been clear that the Fed needs to proceed cautiously.
“Without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals,” he said this year. “We are not, and will not be, a ‘climate policymaker.’”
Lisa Friedman contributed reporting.