| 1 | 1 | | I |
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| 2 | 2 | | 119THCONGRESS |
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| 3 | 3 | | 1 |
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| 4 | 4 | | STSESSION H. R. 2823 |
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| 5 | 5 | | To require the Board of Governors of the Federal Reserve System, in con- |
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| 6 | 6 | | sultation with the heads of other relevant Federal agencies, to develop |
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| 7 | 7 | | and conduct financial risk analyses relating to climate change, and for |
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| 8 | 8 | | other purposes. |
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| 9 | 9 | | IN THE HOUSE OF REPRESENTATIVES |
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| 10 | 10 | | APRIL10, 2025 |
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| 11 | 11 | | Mr. C |
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| 12 | 12 | | ASTENintroduced the following bill; which was referred to the Com- |
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| 13 | 13 | | mittee on Financial Services, and in addition to the Committee on Energy |
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| 14 | 14 | | and Commerce, for a period to be subsequently determined by the Speak- |
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| 15 | 15 | | er, in each case for consideration of such provisions as fall within the ju- |
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| 16 | 16 | | risdiction of the committee concerned |
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| 17 | 17 | | A BILL |
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| 18 | 18 | | To require the Board of Governors of the Federal Reserve |
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| 19 | 19 | | System, in consultation with the heads of other relevant |
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| 20 | 20 | | Federal agencies, to develop and conduct financial risk |
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| 21 | 21 | | analyses relating to climate change, and for other pur- |
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| 22 | 22 | | poses. |
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| 23 | 23 | | Be it enacted by the Senate and House of Representa-1 |
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| 24 | 24 | | tives of the United States of America in Congress assembled, 2 |
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| 25 | 25 | | SECTION 1. SHORT TITLE. 3 |
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| 26 | 26 | | This Act may be cited as the ‘‘Climate Change Finan-4 |
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| 27 | 27 | | cial Risk Act of 2025’’. 5 |
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| 29 | 29 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 2 |
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| 30 | 30 | | •HR 2823 IH |
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| 31 | 31 | | SEC. 2. SENSE OF CONGRESS. 1 |
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| 32 | 32 | | It is the sense of Congress that— 2 |
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| 33 | 33 | | (1) 2024 was the warmest year on record glob-3 |
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| 34 | 34 | | ally and the first calendar year that the average 4 |
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| 35 | 35 | | global temperature exceeded 1.5 degrees Celsius 5 |
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| 36 | 36 | | above pre-industrial levels; 6 |
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| 37 | 37 | | (2) if current trends continue, average global 7 |
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| 38 | 38 | | temperatures over the long term are likely to sur-8 |
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| 39 | 39 | | pass 1.5 degrees Celsius above pre-industrial levels 9 |
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| 40 | 40 | | between 2030 and 2050; 10 |
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| 41 | 41 | | (3) global temperature rise has already resulted 11 |
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| 42 | 42 | | in an increased number of heavy rainstorms, coastal 12 |
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| 43 | 43 | | flooding events, heat waves, hurricanes, wildfires, 13 |
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| 44 | 44 | | and other extreme events; 14 |
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| 45 | 45 | | (4) since 1980— 15 |
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| 46 | 46 | | (A) the number of extreme weather events 16 |
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| 47 | 47 | | per year that cost the people of the United 17 |
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| 48 | 48 | | States more than $1,000,000,000 per event, ac-18 |
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| 49 | 49 | | counting for inflation, has increased signifi-19 |
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| 50 | 50 | | cantly; and 20 |
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| 51 | 51 | | (B) the total cost of extreme weather 21 |
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| 52 | 52 | | events in the United States has exceeded 22 |
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| 53 | 53 | | $2,915,000,000,000; 23 |
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| 54 | 54 | | (5) as physical impacts from climate change are 24 |
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| 55 | 55 | | manifested across multiple sectors of the economy of 25 |
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| 56 | 56 | | the United States— 26 |
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| 59 | 59 | | •HR 2823 IH |
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| 60 | 60 | | (A) climate-related economic risks will con-1 |
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| 61 | 61 | | tinue to increase; 2 |
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| 62 | 62 | | (B) climate-related extreme weather events 3 |
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| 63 | 63 | | will disrupt energy and transportation systems 4 |
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| 64 | 64 | | in the United States, which will result in more 5 |
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| 65 | 65 | | frequent and longer-lasting power outages, fuel 6 |
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| 66 | 66 | | shortages, and service disruptions in critical 7 |
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| 67 | 67 | | sectors across the economy of the United 8 |
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| 68 | 68 | | States; 9 |
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| 69 | 69 | | (C) projected increases in extreme heat 10 |
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| 70 | 70 | | conditions will lead to decreases in labor pro-11 |
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| 71 | 71 | | ductivity in agriculture, construction, and other 12 |
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| 72 | 72 | | critical economic sectors; 13 |
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| 73 | 73 | | (D) food and livestock production will be 14 |
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| 74 | 74 | | impacted in regions that experience increases in 15 |
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| 75 | 75 | | heat and drought, and small rural communities 16 |
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| 76 | 76 | | will struggle to find the resources needed to 17 |
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| 77 | 77 | | adapt to those changes; and 18 |
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| 78 | 78 | | (E) sea level rise and more frequent and 19 |
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| 79 | 79 | | intense extreme weather events will— 20 |
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| 80 | 80 | | (i) increasingly disrupt and damage 21 |
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| 81 | 81 | | private property and critical infrastructure; 22 |
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| 82 | 82 | | (ii) drastically increase insured and 23 |
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| 83 | 83 | | uninsured losses; and 24 |
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| 84 | 84 | | (iii) cause supply chain disruptions; 25 |
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| 87 | 87 | | •HR 2823 IH |
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| 88 | 88 | | (6) advances in energy efficiency and renewable 1 |
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| 89 | 89 | | energy technologies, as well as climate policies and 2 |
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| 90 | 90 | | shifting societal preferences, will— 3 |
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| 91 | 91 | | (A) reduce global demand for fossil fuels; 4 |
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| 92 | 92 | | and 5 |
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| 93 | 93 | | (B) expose transition risks for fossil fuel 6 |
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| 94 | 94 | | companies and investors domestically and glob-7 |
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| 95 | 95 | | ally, and for companies and investors in other 8 |
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| 96 | 96 | | energy-intensive industries, which could include 9 |
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| 97 | 97 | | trillions of dollars of stranded assets around the 10 |
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| 98 | 98 | | world; 11 |
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| 99 | 99 | | (7) climate change poses uniquely far-reaching 12 |
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| 100 | 100 | | risks to the financial services industry, including 13 |
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| 101 | 101 | | with respect to credit, counterparty, and market 14 |
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| 102 | 102 | | risks, due to the number of sectors and locations im-15 |
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| 103 | 103 | | pacted and the potentially irreversible scale of dam-16 |
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| 104 | 104 | | age; 17 |
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| 105 | 105 | | (8) weaknesses in how a financial institution 18 |
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| 106 | 106 | | identifies, measures, monitors, and controls for the 19 |
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| 107 | 107 | | physical risks and transition risks associated with 20 |
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| 108 | 108 | | climate change could adversely affect the safety and 21 |
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| 109 | 109 | | soundness of a financial institution; 22 |
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| 110 | 110 | | (9) financial institutions must take a consistent 23 |
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| 111 | 111 | | approach to assessing climate-related financial risks 24 |
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| 112 | 112 | | and incorporating those risks into existing risk man-25 |
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| 115 | 115 | | •HR 2823 IH |
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| 116 | 116 | | agement practices, which should be informed by sce-1 |
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| 117 | 117 | | nario analysis; 2 |
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| 118 | 118 | | (10) the Board of Governors conducts annual 3 |
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| 119 | 119 | | assessments of the capital adequacy and capital 4 |
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| 120 | 120 | | planning practices of the largest and most complex 5 |
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| 121 | 121 | | banking organizations (referred to in this section as 6 |
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| 122 | 122 | | ‘‘stress tests’’) in order to promote a safe, sound, 7 |
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| 123 | 123 | | and efficient banking and financial system; 8 |
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| 124 | 124 | | (11) as of the date of enactment of this Act— 9 |
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| 125 | 125 | | (A) the stress tests conducted by the 10 |
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| 126 | 126 | | Board of Governors are not designed to reflect 11 |
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| 127 | 127 | | the physical risks or transition risks posed by 12 |
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| 128 | 128 | | climate change; and 13 |
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| 129 | 129 | | (B) the Board of Governors has conducted 14 |
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| 130 | 130 | | 1 pilot climate scenario analysis exercise with 15 |
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| 131 | 131 | | only 6 United States banking organizations; 16 |
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| 132 | 132 | | (12) the Board of Governors— 17 |
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| 133 | 133 | | (A) has stated that economic effects of cli-18 |
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| 134 | 134 | | mate change and the transition to a lower car-19 |
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| 135 | 135 | | bon economy pose an emerging risk to the safe-20 |
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| 136 | 136 | | ty and soundness of financial institutions and 21 |
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| 137 | 137 | | the financial stability of the United States; 22 |
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| 138 | 138 | | (B) has the authority under section 39 of 23 |
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| 139 | 139 | | the Federal Deposit Insurance Act (12 U.S.C. 24 |
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| 140 | 140 | | 1831p–1) and section 165 of the Financial Sta-25 |
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| 143 | 143 | | •HR 2823 IH |
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| 144 | 144 | | bility Act of 2010 (12 U.S.C. 5365) to take 1 |
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| 145 | 145 | | into account the potentially systemic impact of 2 |
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| 146 | 146 | | climate-related risks on the financial system to 3 |
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| 147 | 147 | | preserve the safety and soundness of supervised 4 |
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| 148 | 148 | | institutions and the financial stability of the 5 |
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| 149 | 149 | | United States; and 6 |
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| 150 | 150 | | (C) should develop new analytical tools 7 |
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| 151 | 151 | | with longer time horizons to accurately assess 8 |
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| 152 | 152 | | and manage the risks described in subpara-9 |
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| 153 | 153 | | graph (B); 10 |
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| 154 | 154 | | (13) the Climate-Related Market Risk Sub-11 |
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| 155 | 155 | | committee of the Commodity Futures Trading Com-12 |
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| 156 | 156 | | mission has identified the importance of researching 13 |
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| 157 | 157 | | ‘‘climate-related ‘sub-systemic’ shocks to financial 14 |
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| 158 | 158 | | markets and institutions in particular sectors and 15 |
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| 159 | 159 | | regions of the United States’’; and 16 |
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| 160 | 160 | | (14) the Financial Stability Oversight Council 17 |
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| 161 | 161 | | likewise identified ‘‘[c]limate change [a]s an emerg-18 |
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| 162 | 162 | | ing threat to the financial stability of the United 19 |
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| 163 | 163 | | States’’ and recommended that members of the 20 |
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| 164 | 164 | | Council, including the Board of Governors, take ac-21 |
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| 165 | 165 | | tion to ‘‘strengthen the financial system and make 22 |
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| 166 | 166 | | it more resilient to climate-related shocks and 23 |
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| 167 | 167 | | vulnerabilities’’. 24 |
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| 169 | 169 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 7 |
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| 170 | 170 | | •HR 2823 IH |
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| 171 | 171 | | SEC. 3. DEFINITIONS. 1 |
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| 172 | 172 | | In this Act: 2 |
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| 173 | 173 | | (1) B |
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| 174 | 174 | | ANK HOLDING COMPANY .—The term 3 |
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| 175 | 175 | | ‘‘bank holding company’’ has the meaning given the 4 |
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| 176 | 176 | | term in section 102(a) of the Financial Stability Act 5 |
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| 177 | 177 | | of 2010 (12 U.S.C. 5311(a)). 6 |
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| 178 | 178 | | (2) B |
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| 179 | 179 | | OARD OF GOVERNORS .—The term ‘‘Board 7 |
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| 180 | 180 | | of Governors’’ means the Board of Governors of the 8 |
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| 181 | 181 | | Federal Reserve System. 9 |
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| 182 | 182 | | (3) C |
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| 183 | 183 | | LIMATE SCIENCE LEADS .—The term ‘‘cli-10 |
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| 184 | 184 | | mate science leads’’ means— 11 |
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| 185 | 185 | | (A) the Administrator of the National Oce-12 |
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| 186 | 186 | | anic and Atmospheric Administration; 13 |
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| 187 | 187 | | (B) the Administrator of the Environ-14 |
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| 188 | 188 | | mental Protection Agency; 15 |
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| 189 | 189 | | (C) the Secretary of Energy; 16 |
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| 190 | 190 | | (D) the Assistant Secretary for the Office 17 |
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| 191 | 191 | | of International Affairs of the Department of 18 |
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| 192 | 192 | | Energy; 19 |
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| 193 | 193 | | (E) the Administrator of the National Aer-20 |
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| 194 | 194 | | onautics and Space Administration; 21 |
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| 195 | 195 | | (F) the Assistant Secretary for the Bureau 22 |
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| 196 | 196 | | of Oceans and International Environmental and 23 |
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| 197 | 197 | | Scientific Affairs of the Department of State; 24 |
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| 198 | 198 | | (G) the Director of the United States Geo-25 |
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| 199 | 199 | | logical Survey; 26 |
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| 202 | 202 | | •HR 2823 IH |
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| 203 | 203 | | (H) the Secretary of the Interior; 1 |
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| 204 | 204 | | (I) the Director of the National Climate 2 |
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| 205 | 205 | | Assessment; 3 |
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| 206 | 206 | | (J) the individual from the United States 4 |
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| 207 | 207 | | elected to the Intergovernmental Panel on Cli-5 |
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| 208 | 208 | | mate Change Bureau; 6 |
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| 209 | 209 | | (K) the Permanent Representative of the 7 |
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| 210 | 210 | | United States to the World Meteorological Or-8 |
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| 211 | 211 | | ganization; and 9 |
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| 212 | 212 | | (L) the head of any other Federal agency 10 |
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| 213 | 213 | | that the Board of Governors determines to be 11 |
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| 214 | 214 | | appropriate. 12 |
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| 215 | 215 | | (4) C |
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| 216 | 216 | | OVERED ENTITY.—The term ‘‘covered en-13 |
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| 217 | 217 | | tity’’ means— 14 |
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| 218 | 218 | | (A) a nonbank financial company or bank 15 |
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| 219 | 219 | | holding company that has not less than 16 |
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| 220 | 220 | | $250,000,000,000 in total consolidated assets; 17 |
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| 221 | 221 | | and 18 |
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| 222 | 222 | | (B) a nonbank financial company or bank 19 |
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| 223 | 223 | | holding company— 20 |
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| 224 | 224 | | (i) that has not less than 21 |
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| 225 | 225 | | $100,000,000,000 in total consolidated as-22 |
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| 226 | 226 | | sets; and 23 |
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| 227 | 227 | | (ii) with respect to which the Board of 24 |
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| 228 | 228 | | Governors determines the application of 25 |
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| 230 | 230 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 9 |
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| 231 | 231 | | •HR 2823 IH |
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| 232 | 232 | | subparagraph (C) of section 165(i)(1) of 1 |
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| 233 | 233 | | the Financial Stability Act of 2010 (12 2 |
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| 234 | 234 | | U.S.C. 5365(i)(1)), as added by section 6 3 |
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| 235 | 235 | | of this Act, is appropriate— 4 |
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| 236 | 236 | | (I) to— 5 |
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| 237 | 237 | | (aa) prevent or mitigate 6 |
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| 238 | 238 | | risks to the financial stability of 7 |
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| 239 | 239 | | the United States; or 8 |
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| 240 | 240 | | (bb) promote the safety and 9 |
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| 241 | 241 | | soundness of the company; and 10 |
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| 242 | 242 | | (II) after taking into consider-11 |
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| 243 | 243 | | ation— 12 |
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| 244 | 244 | | (aa) the capital structure, 13 |
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| 245 | 245 | | riskiness, complexity, financial 14 |
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| 246 | 246 | | activities, and size of the com-15 |
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| 247 | 247 | | pany, including the financial ac-16 |
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| 248 | 248 | | tivities of any subsidiary of the 17 |
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| 249 | 249 | | company; and 18 |
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| 250 | 250 | | (bb) any other risk-related 19 |
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| 251 | 251 | | factor that the Board of Gov-20 |
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| 252 | 252 | | ernors determines to be appro-21 |
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| 253 | 253 | | priate. 22 |
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| 254 | 254 | | (5) N |
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| 255 | 255 | | ONBANK FINANCIAL COMPANY .—The term 23 |
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| 256 | 256 | | ‘‘nonbank financial company’’ has the meaning given 24 |
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| 258 | 258 | | kjohnson on DSK7ZCZBW3PROD with $$_JOB 10 |
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| 259 | 259 | | •HR 2823 IH |
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| 260 | 260 | | the term in section 102(a)(4)(C) of the Financial 1 |
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| 261 | 261 | | Stability Act of 2010 (12 U.S.C. 5311(a)(4)(C)). 2 |
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| 262 | 262 | | (6) P |
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| 263 | 263 | | HYSICAL RISKS.—The term ‘‘physical 3 |
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| 264 | 264 | | risks’’ means financial risks to assets, locations, op-4 |
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| 265 | 265 | | erations, or value chains that result from exposure 5 |
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| 266 | 266 | | to physical, climate-related effects, including from— 6 |
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| 267 | 267 | | (A) increased average global temperatures; 7 |
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| 268 | 268 | | (B) increased severity and frequency of ex-8 |
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| 269 | 269 | | treme weather events; 9 |
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| 270 | 270 | | (C) increased flooding; 10 |
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| 271 | 271 | | (D) sea level rise; 11 |
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| 272 | 272 | | (E) ocean acidification; 12 |
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| 273 | 273 | | (F) increased severity and frequency of 13 |
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| 274 | 274 | | heat waves; 14 |
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| 275 | 275 | | (G) increased frequency of wildfires; 15 |
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| 276 | 276 | | (H) decreased arability of farmland; and 16 |
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| 277 | 277 | | (I) decreased availability of fresh water. 17 |
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| 278 | 278 | | (7) S |
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| 279 | 279 | | URVEYED ENTITY.—The term ‘‘surveyed 18 |
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| 280 | 280 | | entity’’ means a bank holding company, nonbank fi-19 |
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| 281 | 281 | | nancial company, or other entity that— 20 |
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| 282 | 282 | | (A) is supervised by the Board of Gov-21 |
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| 283 | 283 | | ernors, the Office of the Comptroller of the 22 |
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| 284 | 284 | | Currency, or the Federal Deposit Insurance 23 |
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| 285 | 285 | | Corporation; 24 |
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| 288 | 288 | | •HR 2823 IH |
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| 289 | 289 | | (B) has total consolidated assets of not 1 |
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| 290 | 290 | | less than $10,000,000,000; and 2 |
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| 291 | 291 | | (C) is not a covered entity. 3 |
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| 292 | 292 | | (8) T |
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| 293 | 293 | | ECHNICAL DEVELOPMENT GROUP .—The 4 |
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| 294 | 294 | | term ‘‘Technical Development Group’’ means the 5 |
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| 295 | 295 | | Climate Risk Scenario Technical Development Group 6 |
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| 296 | 296 | | established under section 4(a). 7 |
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| 297 | 297 | | (9) T |
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| 298 | 298 | | RANSITION RISKS.—The term ‘‘transition 8 |
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| 299 | 299 | | risks’’ means financial risks that are attributable to 9 |
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| 300 | 300 | | climate change mitigation and adaptation, including 10 |
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| 301 | 301 | | efforts to reduce greenhouse gas emissions and 11 |
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| 302 | 302 | | strengthen resilience to the impacts of climate 12 |
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| 303 | 303 | | change, including— 13 |
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| 304 | 304 | | (A) costs relating to— 14 |
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| 305 | 305 | | (i) international treaties and agree-15 |
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| 306 | 306 | | ments; 16 |
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| 307 | 307 | | (ii) Federal, State, and local policies; 17 |
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| 308 | 308 | | (iii) new technologies; 18 |
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| 309 | 309 | | (iv) changing markets; 19 |
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| 310 | 310 | | (v) reputational impacts relevant to 20 |
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| 311 | 311 | | changing consumer behavior; and 21 |
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| 312 | 312 | | (vi) litigation; and 22 |
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| 313 | 313 | | (B) a loss in the value, or the stranding, 23 |
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| 314 | 314 | | of assets due to any of the costs described in 24 |
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| 315 | 315 | | subparagraph (A). 25 |
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| 318 | 318 | | •HR 2823 IH |
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| 319 | 319 | | (10) VALUE CHAIN.—The term ‘‘value chain’’— 1 |
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| 320 | 320 | | (A) means the total lifecycle of a product 2 |
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| 321 | 321 | | or service, both before and after production of 3 |
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| 322 | 322 | | the product or service, as applicable; and 4 |
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| 323 | 323 | | (B) may include the sourcing of materials, 5 |
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| 324 | 324 | | production, and disposal with respect to the 6 |
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| 325 | 325 | | product or service described in subparagraph 7 |
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| 326 | 326 | | (A). 8 |
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| 327 | 327 | | SEC. 4. CLIMATE RISK SCENARIO TECHNICAL DEVELOP-9 |
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| 328 | 328 | | MENT GROUP. 10 |
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| 329 | 329 | | (a) E |
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| 330 | 330 | | STABLISHMENT.—The Board of Governors shall 11 |
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| 331 | 331 | | establish a technical advisory group to be known as the 12 |
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| 332 | 332 | | ‘‘Climate Risk Scenario Technical Development Group’’. 13 |
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| 333 | 333 | | (b) M |
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| 334 | 334 | | EMBERSHIP.— 14 |
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| 335 | 335 | | (1) C |
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| 336 | 336 | | OMPOSITION.—The Technical Develop-15 |
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| 337 | 337 | | ment Group shall be composed of 10 members— 16 |
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| 338 | 338 | | (A) 5 of whom shall be climate scientists, 17 |
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| 339 | 339 | | with a demonstrated record of peer-reviewed 18 |
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| 340 | 340 | | publications and professional contributions to 19 |
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| 341 | 341 | | climate modeling, climate risk assessment, or 20 |
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| 342 | 342 | | related areas; and 21 |
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| 343 | 343 | | (B) 5 of whom shall be economists, with 22 |
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| 344 | 344 | | expertise in either the United States financial 23 |
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| 345 | 345 | | system or the financial risks posed by climate 24 |
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| 346 | 346 | | change. 25 |
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| 350 | 350 | | (2) SELECTION.—The Board of Governors shall 1 |
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| 351 | 351 | | select the members of the Technical Development 2 |
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| 352 | 352 | | Group after consultation with the climate science 3 |
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| 353 | 353 | | leads. 4 |
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| 354 | 354 | | (c) D |
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| 355 | 355 | | UTIES.—The Technical Development Group 5 |
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| 356 | 356 | | shall— 6 |
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| 357 | 357 | | (1) provide recommendations to the Board of 7 |
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| 358 | 358 | | Governors regarding the development of, and up-8 |
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| 359 | 359 | | dates to, the climate change risk scenarios under 9 |
|---|
| 360 | 360 | | section 5; 10 |
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| 361 | 361 | | (2) after the establishment of the climate 11 |
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| 362 | 362 | | change risk scenarios under section 5, determine the 12 |
|---|
| 363 | 363 | | financial and economic risks resulting from those 13 |
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| 364 | 364 | | scenarios; 14 |
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| 365 | 365 | | (3) make any final work product, and any infor-15 |
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| 366 | 366 | | mation used in the development of the final work 16 |
|---|
| 367 | 367 | | product, publicly available; 17 |
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| 368 | 368 | | (4) provide technical assistance to covered enti-18 |
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| 369 | 369 | | ties in assessing physical risks or transition risks; 19 |
|---|
| 370 | 370 | | and 20 |
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| 371 | 371 | | (5) provide publicly available resources to enti-21 |
|---|
| 372 | 372 | | ties that are not covered entities to help those enti-22 |
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| 373 | 373 | | ties assess physical risks and transition risks. 23 |
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| 374 | 374 | | (d) P |
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| 375 | 375 | | ROHIBITION ONCOMPENSATION.—Members of 24 |
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| 376 | 376 | | the Technical Development Group shall serve without pay. 25 |
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| 379 | 379 | | •HR 2823 IH |
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| 380 | 380 | | (e) INAPPLICABILITY OFCHAPTER10 OFTITLE5, 1 |
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| 381 | 381 | | U |
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| 382 | 382 | | NITEDSTATESCODE.—Chapter 10 of title 5, United 2 |
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| 383 | 383 | | States Code, shall not apply with respect to the Technical 3 |
|---|
| 384 | 384 | | Development Group. 4 |
|---|
| 385 | 385 | | SEC. 5. DEVELOPMENT AND UPDATING OF CLIMATE 5 |
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| 386 | 386 | | CHANGE RISK SCENARIOS. 6 |
|---|
| 387 | 387 | | (a) I |
|---|
| 388 | 388 | | NGENERAL.— 7 |
|---|
| 389 | 389 | | (1) I |
|---|
| 390 | 390 | | NITIAL DEVELOPMENT .—Not later than 1 8 |
|---|
| 391 | 391 | | year after the date of enactment of this Act, the 9 |
|---|
| 392 | 392 | | Board of Governors, in coordination with the climate 10 |
|---|
| 393 | 393 | | science leads, and taking into consideration the rec-11 |
|---|
| 394 | 394 | | ommendations of the Technical Development Group, 12 |
|---|
| 395 | 395 | | shall develop 3 separate climate change risk sce-13 |
|---|
| 396 | 396 | | narios as follows: 14 |
|---|
| 397 | 397 | | (A) One scenario that assumes an average 15 |
|---|
| 398 | 398 | | increase in global temperatures of 1.5 degrees 16 |
|---|
| 399 | 399 | | Celsius above pre-industrial levels. 17 |
|---|
| 400 | 400 | | (B) One scenario that assumes an average 18 |
|---|
| 401 | 401 | | increase in global temperatures of 2 degrees 19 |
|---|
| 402 | 402 | | Celsius above pre-industrial levels. 20 |
|---|
| 403 | 403 | | (C) One scenario that— 21 |
|---|
| 404 | 404 | | (i) assumes the likely and very likely 22 |
|---|
| 405 | 405 | | average increase in global temperatures 23 |
|---|
| 406 | 406 | | that can be expected, taking into consider-24 |
|---|
| 407 | 407 | | ation the extent to which national policies 25 |
|---|
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| 410 | 410 | | •HR 2823 IH |
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| 411 | 411 | | and actions relating to climate change have 1 |
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| 412 | 412 | | been implemented, as of the date on which 2 |
|---|
| 413 | 413 | | the scenario is developed; and 3 |
|---|
| 414 | 414 | | (ii) does not take into consideration 4 |
|---|
| 415 | 415 | | commitments for national policies and ac-5 |
|---|
| 416 | 416 | | tions relating to climate change that, as of 6 |
|---|
| 417 | 417 | | the date described in clause (i), have not 7 |
|---|
| 418 | 418 | | been implemented. 8 |
|---|
| 419 | 419 | | (2) I |
|---|
| 420 | 420 | | NTERNATIONAL COORDINATION .—In devel-9 |
|---|
| 421 | 421 | | oping and updating the 3 scenarios required under 10 |
|---|
| 422 | 422 | | this subsection, the Board of Governors shall take 11 |
|---|
| 423 | 423 | | into consideration analytical tools and best practices 12 |
|---|
| 424 | 424 | | developed by international banking supervisors relat-13 |
|---|
| 425 | 425 | | ing to climate risks and scenario analysis in an ef-14 |
|---|
| 426 | 426 | | fort to develop consistent and comparable data-driv-15 |
|---|
| 427 | 427 | | en scenarios. 16 |
|---|
| 428 | 428 | | (3) R |
|---|
| 429 | 429 | | ECOMMENDATIONS .—If the Technical De-17 |
|---|
| 430 | 430 | | velopment Group determines that the average in-18 |
|---|
| 431 | 431 | | crease in global temperatures described in subpara-19 |
|---|
| 432 | 432 | | graph (A) or (B) of paragraph (1) is no longer sci-20 |
|---|
| 433 | 433 | | entifically valid, the Technical Development Group 21 |
|---|
| 434 | 434 | | may recommend that the Board of Governors, in co-22 |
|---|
| 435 | 435 | | ordination with the climate science leads, update the 23 |
|---|
| 436 | 436 | | average increase in global temperatures described in 24 |
|---|
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| 439 | 439 | | •HR 2823 IH |
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| 440 | 440 | | the applicable subparagraph to reflect the most cur-1 |
|---|
| 441 | 441 | | rent assessment of climate change science. 2 |
|---|
| 442 | 442 | | (b) C |
|---|
| 443 | 443 | | ONSIDERATIONS.—In developing and updating 3 |
|---|
| 444 | 444 | | each of the 3 scenarios required under subsection (a), the 4 |
|---|
| 445 | 445 | | Board of Governors, in coordination with the climate 5 |
|---|
| 446 | 446 | | science leads, shall account for physical risks and transi-6 |
|---|
| 447 | 447 | | tion risks that may disrupt business operations across the 7 |
|---|
| 448 | 448 | | global economy, including through— 8 |
|---|
| 449 | 449 | | (1) disruptions with respect to— 9 |
|---|
| 450 | 450 | | (A) the sourcing of materials; 10 |
|---|
| 451 | 451 | | (B) production; 11 |
|---|
| 452 | 452 | | (C) transportation; and 12 |
|---|
| 453 | 453 | | (D) the disposal of products and services; 13 |
|---|
| 454 | 454 | | (2) changes in the availability and prices of raw 14 |
|---|
| 455 | 455 | | materials and other inputs; 15 |
|---|
| 456 | 456 | | (3) changes in agricultural production and with 16 |
|---|
| 457 | 457 | | respect to food security; 17 |
|---|
| 458 | 458 | | (4) direct damages to fixed assets; 18 |
|---|
| 459 | 459 | | (5) increases in costs associated with insured or 19 |
|---|
| 460 | 460 | | uninsured losses; 20 |
|---|
| 461 | 461 | | (6) changes in asset values; 21 |
|---|
| 462 | 462 | | (7) impacts on— 22 |
|---|
| 463 | 463 | | (A) aggregate demand for products and 23 |
|---|
| 464 | 464 | | services; 24 |
|---|
| 465 | 465 | | (B) labor productivity; 25 |
|---|
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| 468 | 468 | | •HR 2823 IH |
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| 469 | 469 | | (C) asset liquidity; and 1 |
|---|
| 470 | 470 | | (D) credit availability; 2 |
|---|
| 471 | 471 | | (8) mass migration and increases in disease and 3 |
|---|
| 472 | 472 | | mortality rates; 4 |
|---|
| 473 | 473 | | (9) international conflict, as such conflict re-5 |
|---|
| 474 | 474 | | lates to global economic activity and output; and 6 |
|---|
| 475 | 475 | | (10) changes in any other microeconomic or 7 |
|---|
| 476 | 476 | | macroeconomic condition that the Board of Gov-8 |
|---|
| 477 | 477 | | ernors, in coordination with the climate science 9 |
|---|
| 478 | 478 | | leads, determines to be relevant. 10 |
|---|
| 479 | 479 | | SEC. 6. CLIMATE-RELATED ENHANCED SUPERVISION FOR 11 |
|---|
| 480 | 480 | | CERTAIN NONBANK FINANCIAL COMPANIES 12 |
|---|
| 481 | 481 | | AND BANK HOLDING COMPANIES. 13 |
|---|
| 482 | 482 | | Section 165(i)(1) of the Financial Stability Act of 14 |
|---|
| 483 | 483 | | 2010 (12 U.S.C. 5365(i)(1)) is amended— 15 |
|---|
| 484 | 484 | | (1) in subparagraph (B)(i), by inserting ‘‘except 16 |
|---|
| 485 | 485 | | as provided in subparagraph (C)(ii)(I),’’ before 17 |
|---|
| 486 | 486 | | ‘‘shall provide’’; and 18 |
|---|
| 487 | 487 | | (2) by adding at the end the following: 19 |
|---|
| 488 | 488 | | ‘‘(C) B |
|---|
| 489 | 489 | | IENNIAL TESTS REQUIRED .— 20 |
|---|
| 490 | 490 | | ‘‘(i) D |
|---|
| 491 | 491 | | EFINITIONS.—In this subpara-21 |
|---|
| 492 | 492 | | graph— 22 |
|---|
| 493 | 493 | | ‘‘(I) the term ‘capital distribu-23 |
|---|
| 494 | 494 | | tion’ has the meaning given the term 24 |
|---|
| 495 | 495 | | in section 225.8(d)(4) of title 12, 25 |
|---|
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| 498 | 498 | | •HR 2823 IH |
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| 499 | 499 | | Code of Federal Regulations, as in ef-1 |
|---|
| 500 | 500 | | fect on the date of enactment of this 2 |
|---|
| 501 | 501 | | subparagraph; 3 |
|---|
| 502 | 502 | | ‘‘(II) the term ‘capital policy’ has 4 |
|---|
| 503 | 503 | | the meaning given the term in section 5 |
|---|
| 504 | 504 | | 225.8(d)(7) of title 12, Code of Fed-6 |
|---|
| 505 | 505 | | eral Regulations, as in effect on the 7 |
|---|
| 506 | 506 | | date of enactment of this subpara-8 |
|---|
| 507 | 507 | | graph; and 9 |
|---|
| 508 | 508 | | ‘‘(III) the terms ‘climate science 10 |
|---|
| 509 | 509 | | leads’ and ‘covered entity’ have the 11 |
|---|
| 510 | 510 | | meanings given those terms in section 12 |
|---|
| 511 | 511 | | 3 of the Climate Change Financial 13 |
|---|
| 512 | 512 | | Risk Act of 2025. 14 |
|---|
| 513 | 513 | | ‘‘(ii) T |
|---|
| 514 | 514 | | ESTS.— 15 |
|---|
| 515 | 515 | | ‘‘(I) I |
|---|
| 516 | 516 | | N GENERAL.—The Board of 16 |
|---|
| 517 | 517 | | Governors, in coordination with the 17 |
|---|
| 518 | 518 | | appropriate primary financial regu-18 |
|---|
| 519 | 519 | | latory agencies and the climate 19 |
|---|
| 520 | 520 | | science leads, shall conduct biennial 20 |
|---|
| 521 | 521 | | analyses in which each covered entity 21 |
|---|
| 522 | 522 | | shall be subject to evaluation, under 22 |
|---|
| 523 | 523 | | an adverse set of conditions, of wheth-23 |
|---|
| 524 | 524 | | er that covered entity has the capital, 24 |
|---|
| 525 | 525 | | on a total consolidated basis, nec-25 |
|---|
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| 528 | 528 | | •HR 2823 IH |
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| 529 | 529 | | essary to absorb financial losses that 1 |
|---|
| 530 | 530 | | would arise under each climate change 2 |
|---|
| 531 | 531 | | risk scenario developed under section 3 |
|---|
| 532 | 532 | | 5 of the Climate Change Financial 4 |
|---|
| 533 | 533 | | Risk Act of 2025. 5 |
|---|
| 534 | 534 | | ‘‘(II) I |
|---|
| 535 | 535 | | NITIAL TESTS.—With re-6 |
|---|
| 536 | 536 | | spect to each of the first 3 analyses 7 |
|---|
| 537 | 537 | | conducted under subclause (I)— 8 |
|---|
| 538 | 538 | | ‘‘(aa) the covered entity to 9 |
|---|
| 539 | 539 | | which such an analysis applies 10 |
|---|
| 540 | 540 | | shall not be subject to any ad-11 |
|---|
| 541 | 541 | | verse consequences as a result of 12 |
|---|
| 542 | 542 | | the analysis; and 13 |
|---|
| 543 | 543 | | ‘‘(bb) the Board of Gov-14 |
|---|
| 544 | 544 | | ernors shall— 15 |
|---|
| 545 | 545 | | ‘‘(AA) not later than 60 16 |
|---|
| 546 | 546 | | days after the date on which 17 |
|---|
| 547 | 547 | | the Board of Governors 18 |
|---|
| 548 | 548 | | completes the analysis, make 19 |
|---|
| 549 | 549 | | a summary of the analysis 20 |
|---|
| 550 | 550 | | publicly available; and 21 |
|---|
| 551 | 551 | | ‘‘(BB) submit a copy of 22 |
|---|
| 552 | 552 | | the results of the analysis to 23 |
|---|
| 553 | 553 | | the Committee on Banking, 24 |
|---|
| 554 | 554 | | Housing, and Urban Affairs 25 |
|---|
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| 557 | 557 | | •HR 2823 IH |
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| 558 | 558 | | of the Senate and the Com-1 |
|---|
| 559 | 559 | | mittee on Financial Services 2 |
|---|
| 560 | 560 | | of the House of Representa-3 |
|---|
| 561 | 561 | | tives. 4 |
|---|
| 562 | 562 | | ‘‘(III) C |
|---|
| 563 | 563 | | LIMATE RISK RESOLU -5 |
|---|
| 564 | 564 | | TION PLAN.— 6 |
|---|
| 565 | 565 | | ‘‘(aa) I |
|---|
| 566 | 566 | | N GENERAL.—Except 7 |
|---|
| 567 | 567 | | with respect to the first analysis 8 |
|---|
| 568 | 568 | | conducted under subclause (I), 9 |
|---|
| 569 | 569 | | each covered entity shall, before 10 |
|---|
| 570 | 570 | | being subject to an analysis 11 |
|---|
| 571 | 571 | | under that subclause, submit to 12 |
|---|
| 572 | 572 | | the Board of Governors a resolu-13 |
|---|
| 573 | 573 | | tion plan with respect to climate 14 |
|---|
| 574 | 574 | | risk planning (referred to in this 15 |
|---|
| 575 | 575 | | subclause as a ‘climate risk reso-16 |
|---|
| 576 | 576 | | lution plan’), which shall be 17 |
|---|
| 577 | 577 | | based on the results of the most 18 |
|---|
| 578 | 578 | | recently conducted analysis of the 19 |
|---|
| 579 | 579 | | covered entity under that sub-20 |
|---|
| 580 | 580 | | clause. 21 |
|---|
| 581 | 581 | | ‘‘(bb) C |
|---|
| 582 | 582 | | ONTENTS.—Each cli-22 |
|---|
| 583 | 583 | | mate risk resolution plan re-23 |
|---|
| 584 | 584 | | quired under item (aa) shall in-24 |
|---|
| 585 | 585 | | clude— 25 |
|---|
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| 588 | 588 | | •HR 2823 IH |
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| 589 | 589 | | ‘‘(AA) a capital policy 1 |
|---|
| 590 | 590 | | with respect to climate risk 2 |
|---|
| 591 | 591 | | planning; and 3 |
|---|
| 592 | 592 | | ‘‘(BB) qualitative and 4 |
|---|
| 593 | 593 | | quantitative targets for bal-5 |
|---|
| 594 | 594 | | ance sheet and off-balance 6 |
|---|
| 595 | 595 | | sheet exposures, and other 7 |
|---|
| 596 | 596 | | business operations, that 8 |
|---|
| 597 | 597 | | remedy vulnerabilities identi-9 |
|---|
| 598 | 598 | | fied in the most recently 10 |
|---|
| 599 | 599 | | conducted analysis of the 11 |
|---|
| 600 | 600 | | applicable covered entity 12 |
|---|
| 601 | 601 | | under subclause (I). 13 |
|---|
| 602 | 602 | | ‘‘(cc) R |
|---|
| 603 | 603 | | EJECTION.—The 14 |
|---|
| 604 | 604 | | Board of Governors may object 15 |
|---|
| 605 | 605 | | to a climate risk resolution plan 16 |
|---|
| 606 | 606 | | submitted by a covered entity 17 |
|---|
| 607 | 607 | | under item (aa) if the Board of 18 |
|---|
| 608 | 608 | | Governors determines that— 19 |
|---|
| 609 | 609 | | ‘‘(AA) the covered enti-20 |
|---|
| 610 | 610 | | ty has not demonstrated 21 |
|---|
| 611 | 611 | | that such plan is reasonable 22 |
|---|
| 612 | 612 | | to maintain capital above 23 |
|---|
| 613 | 613 | | each minimum regulatory 24 |
|---|
| 614 | 614 | | capital ratio on a pro forma 25 |
|---|
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| 617 | 617 | | •HR 2823 IH |
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| 618 | 618 | | basis under the adverse set 1 |
|---|
| 619 | 619 | | of conditions described in 2 |
|---|
| 620 | 620 | | subclause (I); 3 |
|---|
| 621 | 621 | | ‘‘(BB) the climate risk 4 |
|---|
| 622 | 622 | | resolution plan is otherwise 5 |
|---|
| 623 | 623 | | not reasonable or appro-6 |
|---|
| 624 | 624 | | priate, including because the 7 |
|---|
| 625 | 625 | | climate risk resolution plan 8 |
|---|
| 626 | 626 | | no longer provides fair serv-9 |
|---|
| 627 | 627 | | ices to vulnerable and dis-10 |
|---|
| 628 | 628 | | advantaged communities; 11 |
|---|
| 629 | 629 | | ‘‘(CC) the assumptions 12 |
|---|
| 630 | 630 | | and analysis underlying the 13 |
|---|
| 631 | 631 | | climate risk resolution plan, 14 |
|---|
| 632 | 632 | | or the methodologies and 15 |
|---|
| 633 | 633 | | practices that support that 16 |
|---|
| 634 | 634 | | plan, are not reasonable or 17 |
|---|
| 635 | 635 | | appropriate; or 18 |
|---|
| 636 | 636 | | ‘‘(DD) the climate risk 19 |
|---|
| 637 | 637 | | resolution plan otherwise 20 |
|---|
| 638 | 638 | | constitutes an unsafe or un-21 |
|---|
| 639 | 639 | | sound practice. 22 |
|---|
| 640 | 640 | | ‘‘(dd) G |
|---|
| 641 | 641 | | ENERAL DISTRIBU-23 |
|---|
| 642 | 642 | | TION LIMITATION.—If the Board 24 |
|---|
| 643 | 643 | | of Governors objects to a climate 25 |
|---|
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| 646 | 646 | | •HR 2823 IH |
|---|
| 647 | 647 | | risk resolution plan submitted by 1 |
|---|
| 648 | 648 | | a covered entity under item (aa), 2 |
|---|
| 649 | 649 | | the covered entity may not make 3 |
|---|
| 650 | 650 | | any capital distribution, other 4 |
|---|
| 651 | 651 | | than a capital distribution arising 5 |
|---|
| 652 | 652 | | from the issuance of a regulatory 6 |
|---|
| 653 | 653 | | capital instrument eligible for in-7 |
|---|
| 654 | 654 | | clusion in the numerator of a 8 |
|---|
| 655 | 655 | | minimum regulatory capital 9 |
|---|
| 656 | 656 | | ratio.’’. 10 |
|---|
| 657 | 657 | | SEC. 7. SUB-SYSTEMIC EXPLORATORY SURVEY. 11 |
|---|
| 658 | 658 | | (a) D |
|---|
| 659 | 659 | | EVELOPMENT OF SURVEY.—The Board of Gov-12 |
|---|
| 660 | 660 | | ernors, in consultation with the Comptroller of the Cur-13 |
|---|
| 661 | 661 | | rency and the Board of Directors of the Federal Deposit 14 |
|---|
| 662 | 662 | | Insurance Corporation, shall develop a survey to assess— 15 |
|---|
| 663 | 663 | | (1) the ability of surveyed entities to withstand 16 |
|---|
| 664 | 664 | | each climate risk scenario developed under section 5; 17 |
|---|
| 665 | 665 | | (2) which surveyed entities possess a large con-18 |
|---|
| 666 | 666 | | centration of business activities in geographical 19 |
|---|
| 667 | 667 | | areas or industries that are significantly exposed to 20 |
|---|
| 668 | 668 | | the short- and long-term impacts of climate change; 21 |
|---|
| 669 | 669 | | and 22 |
|---|
| 670 | 670 | | (3) how the surveyed entities identified under 23 |
|---|
| 671 | 671 | | paragraph (2) plan to make adaptations to the busi-24 |
|---|
| 672 | 672 | | ness models and capital planning of those entities in 25 |
|---|
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| 675 | 675 | | •HR 2823 IH |
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| 676 | 676 | | response to the risks presented in each climate 1 |
|---|
| 677 | 677 | | change risk scenario developed under section 5. 2 |
|---|
| 678 | 678 | | (b) A |
|---|
| 679 | 679 | | DMINISTRATION OFSURVEY.— 3 |
|---|
| 680 | 680 | | (1) I |
|---|
| 681 | 681 | | NITIAL ADMINISTRATION.— 4 |
|---|
| 682 | 682 | | (A) I |
|---|
| 683 | 683 | | N GENERAL.—Not later than 1 year 5 |
|---|
| 684 | 684 | | after the completion of the first analysis under 6 |
|---|
| 685 | 685 | | subparagraph (C) of section 165(i)(1) of the Fi-7 |
|---|
| 686 | 686 | | nancial Stability Act of 2010 (12 U.S.C. 8 |
|---|
| 687 | 687 | | 5365(i)(1)), as added by section 6 of this Act, 9 |
|---|
| 688 | 688 | | the Board of Governors, in consultation with 10 |
|---|
| 689 | 689 | | the Comptroller of the Currency and the Board 11 |
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| 690 | 690 | | of Directors of the Federal Deposit Insurance 12 |
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| 691 | 691 | | Corporation, shall administer the survey devel-13 |
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| 692 | 692 | | oped under subsection (a) to each surveyed en-14 |
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| 693 | 693 | | tity. 15 |
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| 694 | 694 | | (B) A |
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| 695 | 695 | | SSESSMENT AND REPORT .—Not later 16 |
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| 696 | 696 | | than 18 months after the date on which the 17 |
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| 697 | 697 | | Board of Governors completes the administra-18 |
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| 698 | 698 | | tion of the survey under subparagraph (A), the 19 |
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| 699 | 699 | | Board of Governors shall publicly release a re-20 |
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| 700 | 700 | | port that— 21 |
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| 701 | 701 | | (i) summarizes the results of the sur-22 |
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| 702 | 702 | | vey; and 23 |
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| 706 | 706 | | (ii) analyzes whether the planned ac-1 |
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| 707 | 707 | | tions of the surveyed entities, in the aggre-2 |
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| 708 | 708 | | gate, are plausible and would be effective. 3 |
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| 709 | 709 | | (2) S |
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| 710 | 710 | | UBSEQUENT ADMINISTRATION .— 4 |
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| 711 | 711 | | (A) I |
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| 712 | 712 | | N GENERAL.—Not later than 2 years 5 |
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| 713 | 713 | | after the date on which the Board of Governors 6 |
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| 714 | 714 | | releases the report required under paragraph 7 |
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| 715 | 715 | | (1)(B), and biennially thereafter, the Board of 8 |
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| 716 | 716 | | Governors shall readminister to each surveyed 9 |
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| 717 | 717 | | entity the survey developed under subsection 10 |
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| 718 | 718 | | (a). 11 |
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| 719 | 719 | | (B) S |
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| 720 | 720 | | UBSEQUENT REPORT .—Not later 12 |
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| 721 | 721 | | than 180 days after the date on which each sur-13 |
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| 722 | 722 | | vey described under subparagraph (A) is com-14 |
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| 723 | 723 | | pleted, the Board of Governors shall publicly re-15 |
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| 724 | 724 | | lease a report that summarizes the results of 16 |
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| 725 | 725 | | the survey, which shall include the analysis de-17 |
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| 726 | 726 | | scribed in paragraph (1)(B)(ii). 18 |
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| 727 | 727 | | (c) E |
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| 728 | 728 | | FFECT OFSURVEYPARTICIPATION.—In any re-19 |
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| 729 | 729 | | port released with respect to a survey conducted under 20 |
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| 730 | 730 | | this section, the Board of Governors may not identify any 21 |
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| 731 | 731 | | individual surveyed entity that responded to the survey. 22 |
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| 732 | 732 | | (d) R |
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| 733 | 733 | | ULE OFCONSTRUCTION.—Nothing in this sec-23 |
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| 734 | 734 | | tion may be construed to preclude the Board of Governors 24 |
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| 735 | 735 | | from pursuing an enforcement action against a surveyed 25 |
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| 739 | 739 | | entity because of a violation discovered by the Board of 1 |
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| 740 | 740 | | Governors during an examination of the surveyed entity 2 |
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| 741 | 741 | | that is independent of a survey administered under this 3 |
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| 742 | 742 | | section. 4 |
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| 743 | 743 | | Æ |
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