I
119THCONGRESS
1
STSESSION H. R. 2823
To require the Board of Governors of the Federal Reserve System, in con-
sultation with the heads of other relevant Federal agencies, to develop
and conduct financial risk analyses relating to climate change, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL10, 2025
Mr. C
ASTENintroduced the following bill; which was referred to the Com-
mittee on Financial Services, and in addition to the Committee on Energy
and Commerce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned
A BILL
To require the Board of Governors of the Federal Reserve
System, in consultation with the heads of other relevant
Federal agencies, to develop and conduct financial risk
analyses relating to climate change, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Climate Change Finan-4
cial Risk Act of 2025’’. 5
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SEC. 2. SENSE OF CONGRESS. 1
It is the sense of Congress that— 2
(1) 2024 was the warmest year on record glob-3
ally and the first calendar year that the average 4
global temperature exceeded 1.5 degrees Celsius 5
above pre-industrial levels; 6
(2) if current trends continue, average global 7
temperatures over the long term are likely to sur-8
pass 1.5 degrees Celsius above pre-industrial levels 9
between 2030 and 2050; 10
(3) global temperature rise has already resulted 11
in an increased number of heavy rainstorms, coastal 12
flooding events, heat waves, hurricanes, wildfires, 13
and other extreme events; 14
(4) since 1980— 15
(A) the number of extreme weather events 16
per year that cost the people of the United 17
States more than $1,000,000,000 per event, ac-18
counting for inflation, has increased signifi-19
cantly; and 20
(B) the total cost of extreme weather 21
events in the United States has exceeded 22
$2,915,000,000,000; 23
(5) as physical impacts from climate change are 24
manifested across multiple sectors of the economy of 25
the United States— 26
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(A) climate-related economic risks will con-1
tinue to increase; 2
(B) climate-related extreme weather events 3
will disrupt energy and transportation systems 4
in the United States, which will result in more 5
frequent and longer-lasting power outages, fuel 6
shortages, and service disruptions in critical 7
sectors across the economy of the United 8
States; 9
(C) projected increases in extreme heat 10
conditions will lead to decreases in labor pro-11
ductivity in agriculture, construction, and other 12
critical economic sectors; 13
(D) food and livestock production will be 14
impacted in regions that experience increases in 15
heat and drought, and small rural communities 16
will struggle to find the resources needed to 17
adapt to those changes; and 18
(E) sea level rise and more frequent and 19
intense extreme weather events will— 20
(i) increasingly disrupt and damage 21
private property and critical infrastructure; 22
(ii) drastically increase insured and 23
uninsured losses; and 24
(iii) cause supply chain disruptions; 25
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(6) advances in energy efficiency and renewable 1
energy technologies, as well as climate policies and 2
shifting societal preferences, will— 3
(A) reduce global demand for fossil fuels; 4
and 5
(B) expose transition risks for fossil fuel 6
companies and investors domestically and glob-7
ally, and for companies and investors in other 8
energy-intensive industries, which could include 9
trillions of dollars of stranded assets around the 10
world; 11
(7) climate change poses uniquely far-reaching 12
risks to the financial services industry, including 13
with respect to credit, counterparty, and market 14
risks, due to the number of sectors and locations im-15
pacted and the potentially irreversible scale of dam-16
age; 17
(8) weaknesses in how a financial institution 18
identifies, measures, monitors, and controls for the 19
physical risks and transition risks associated with 20
climate change could adversely affect the safety and 21
soundness of a financial institution; 22
(9) financial institutions must take a consistent 23
approach to assessing climate-related financial risks 24
and incorporating those risks into existing risk man-25
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agement practices, which should be informed by sce-1
nario analysis; 2
(10) the Board of Governors conducts annual 3
assessments of the capital adequacy and capital 4
planning practices of the largest and most complex 5
banking organizations (referred to in this section as 6
‘‘stress tests’’) in order to promote a safe, sound, 7
and efficient banking and financial system; 8
(11) as of the date of enactment of this Act— 9
(A) the stress tests conducted by the 10
Board of Governors are not designed to reflect 11
the physical risks or transition risks posed by 12
climate change; and 13
(B) the Board of Governors has conducted 14
1 pilot climate scenario analysis exercise with 15
only 6 United States banking organizations; 16
(12) the Board of Governors— 17
(A) has stated that economic effects of cli-18
mate change and the transition to a lower car-19
bon economy pose an emerging risk to the safe-20
ty and soundness of financial institutions and 21
the financial stability of the United States; 22
(B) has the authority under section 39 of 23
the Federal Deposit Insurance Act (12 U.S.C. 24
1831p–1) and section 165 of the Financial Sta-25
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bility Act of 2010 (12 U.S.C. 5365) to take 1
into account the potentially systemic impact of 2
climate-related risks on the financial system to 3
preserve the safety and soundness of supervised 4
institutions and the financial stability of the 5
United States; and 6
(C) should develop new analytical tools 7
with longer time horizons to accurately assess 8
and manage the risks described in subpara-9
graph (B); 10
(13) the Climate-Related Market Risk Sub-11
committee of the Commodity Futures Trading Com-12
mission has identified the importance of researching 13
‘‘climate-related ‘sub-systemic’ shocks to financial 14
markets and institutions in particular sectors and 15
regions of the United States’’; and 16
(14) the Financial Stability Oversight Council 17
likewise identified ‘‘[c]limate change [a]s an emerg-18
ing threat to the financial stability of the United 19
States’’ and recommended that members of the 20
Council, including the Board of Governors, take ac-21
tion to ‘‘strengthen the financial system and make 22
it more resilient to climate-related shocks and 23
vulnerabilities’’. 24
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SEC. 3. DEFINITIONS. 1
In this Act: 2
(1) B
ANK HOLDING COMPANY .—The term 3
‘‘bank holding company’’ has the meaning given the 4
term in section 102(a) of the Financial Stability Act 5
of 2010 (12 U.S.C. 5311(a)). 6
(2) B
OARD OF GOVERNORS .—The term ‘‘Board 7
of Governors’’ means the Board of Governors of the 8
Federal Reserve System. 9
(3) C
LIMATE SCIENCE LEADS .—The term ‘‘cli-10
mate science leads’’ means— 11
(A) the Administrator of the National Oce-12
anic and Atmospheric Administration; 13
(B) the Administrator of the Environ-14
mental Protection Agency; 15
(C) the Secretary of Energy; 16
(D) the Assistant Secretary for the Office 17
of International Affairs of the Department of 18
Energy; 19
(E) the Administrator of the National Aer-20
onautics and Space Administration; 21
(F) the Assistant Secretary for the Bureau 22
of Oceans and International Environmental and 23
Scientific Affairs of the Department of State; 24
(G) the Director of the United States Geo-25
logical Survey; 26
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(H) the Secretary of the Interior; 1
(I) the Director of the National Climate 2
Assessment; 3
(J) the individual from the United States 4
elected to the Intergovernmental Panel on Cli-5
mate Change Bureau; 6
(K) the Permanent Representative of the 7
United States to the World Meteorological Or-8
ganization; and 9
(L) the head of any other Federal agency 10
that the Board of Governors determines to be 11
appropriate. 12
(4) C
OVERED ENTITY.—The term ‘‘covered en-13
tity’’ means— 14
(A) a nonbank financial company or bank 15
holding company that has not less than 16
$250,000,000,000 in total consolidated assets; 17
and 18
(B) a nonbank financial company or bank 19
holding company— 20
(i) that has not less than 21
$100,000,000,000 in total consolidated as-22
sets; and 23
(ii) with respect to which the Board of 24
Governors determines the application of 25
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subparagraph (C) of section 165(i)(1) of 1
the Financial Stability Act of 2010 (12 2
U.S.C. 5365(i)(1)), as added by section 6 3
of this Act, is appropriate— 4
(I) to— 5
(aa) prevent or mitigate 6
risks to the financial stability of 7
the United States; or 8
(bb) promote the safety and 9
soundness of the company; and 10
(II) after taking into consider-11
ation— 12
(aa) the capital structure, 13
riskiness, complexity, financial 14
activities, and size of the com-15
pany, including the financial ac-16
tivities of any subsidiary of the 17
company; and 18
(bb) any other risk-related 19
factor that the Board of Gov-20
ernors determines to be appro-21
priate. 22
(5) N
ONBANK FINANCIAL COMPANY .—The term 23
‘‘nonbank financial company’’ has the meaning given 24
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the term in section 102(a)(4)(C) of the Financial 1
Stability Act of 2010 (12 U.S.C. 5311(a)(4)(C)). 2
(6) P
HYSICAL RISKS.—The term ‘‘physical 3
risks’’ means financial risks to assets, locations, op-4
erations, or value chains that result from exposure 5
to physical, climate-related effects, including from— 6
(A) increased average global temperatures; 7
(B) increased severity and frequency of ex-8
treme weather events; 9
(C) increased flooding; 10
(D) sea level rise; 11
(E) ocean acidification; 12
(F) increased severity and frequency of 13
heat waves; 14
(G) increased frequency of wildfires; 15
(H) decreased arability of farmland; and 16
(I) decreased availability of fresh water. 17
(7) S
URVEYED ENTITY.—The term ‘‘surveyed 18
entity’’ means a bank holding company, nonbank fi-19
nancial company, or other entity that— 20
(A) is supervised by the Board of Gov-21
ernors, the Office of the Comptroller of the 22
Currency, or the Federal Deposit Insurance 23
Corporation; 24
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(B) has total consolidated assets of not 1
less than $10,000,000,000; and 2
(C) is not a covered entity. 3
(8) T
ECHNICAL DEVELOPMENT GROUP .—The 4
term ‘‘Technical Development Group’’ means the 5
Climate Risk Scenario Technical Development Group 6
established under section 4(a). 7
(9) T
RANSITION RISKS.—The term ‘‘transition 8
risks’’ means financial risks that are attributable to 9
climate change mitigation and adaptation, including 10
efforts to reduce greenhouse gas emissions and 11
strengthen resilience to the impacts of climate 12
change, including— 13
(A) costs relating to— 14
(i) international treaties and agree-15
ments; 16
(ii) Federal, State, and local policies; 17
(iii) new technologies; 18
(iv) changing markets; 19
(v) reputational impacts relevant to 20
changing consumer behavior; and 21
(vi) litigation; and 22
(B) a loss in the value, or the stranding, 23
of assets due to any of the costs described in 24
subparagraph (A). 25
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(10) VALUE CHAIN.—The term ‘‘value chain’’— 1
(A) means the total lifecycle of a product 2
or service, both before and after production of 3
the product or service, as applicable; and 4
(B) may include the sourcing of materials, 5
production, and disposal with respect to the 6
product or service described in subparagraph 7
(A). 8
SEC. 4. CLIMATE RISK SCENARIO TECHNICAL DEVELOP-9
MENT GROUP. 10
(a) E
STABLISHMENT.—The Board of Governors shall 11
establish a technical advisory group to be known as the 12
‘‘Climate Risk Scenario Technical Development Group’’. 13
(b) M
EMBERSHIP.— 14
(1) C
OMPOSITION.—The Technical Develop-15
ment Group shall be composed of 10 members— 16
(A) 5 of whom shall be climate scientists, 17
with a demonstrated record of peer-reviewed 18
publications and professional contributions to 19
climate modeling, climate risk assessment, or 20
related areas; and 21
(B) 5 of whom shall be economists, with 22
expertise in either the United States financial 23
system or the financial risks posed by climate 24
change. 25
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(2) SELECTION.—The Board of Governors shall 1
select the members of the Technical Development 2
Group after consultation with the climate science 3
leads. 4
(c) D
UTIES.—The Technical Development Group 5
shall— 6
(1) provide recommendations to the Board of 7
Governors regarding the development of, and up-8
dates to, the climate change risk scenarios under 9
section 5; 10
(2) after the establishment of the climate 11
change risk scenarios under section 5, determine the 12
financial and economic risks resulting from those 13
scenarios; 14
(3) make any final work product, and any infor-15
mation used in the development of the final work 16
product, publicly available; 17
(4) provide technical assistance to covered enti-18
ties in assessing physical risks or transition risks; 19
and 20
(5) provide publicly available resources to enti-21
ties that are not covered entities to help those enti-22
ties assess physical risks and transition risks. 23
(d) P
ROHIBITION ONCOMPENSATION.—Members of 24
the Technical Development Group shall serve without pay. 25
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(e) INAPPLICABILITY OFCHAPTER10 OFTITLE5, 1
U
NITEDSTATESCODE.—Chapter 10 of title 5, United 2
States Code, shall not apply with respect to the Technical 3
Development Group. 4
SEC. 5. DEVELOPMENT AND UPDATING OF CLIMATE 5
CHANGE RISK SCENARIOS. 6
(a) I
NGENERAL.— 7
(1) I
NITIAL DEVELOPMENT .—Not later than 1 8
year after the date of enactment of this Act, the 9
Board of Governors, in coordination with the climate 10
science leads, and taking into consideration the rec-11
ommendations of the Technical Development Group, 12
shall develop 3 separate climate change risk sce-13
narios as follows: 14
(A) One scenario that assumes an average 15
increase in global temperatures of 1.5 degrees 16
Celsius above pre-industrial levels. 17
(B) One scenario that assumes an average 18
increase in global temperatures of 2 degrees 19
Celsius above pre-industrial levels. 20
(C) One scenario that— 21
(i) assumes the likely and very likely 22
average increase in global temperatures 23
that can be expected, taking into consider-24
ation the extent to which national policies 25
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and actions relating to climate change have 1
been implemented, as of the date on which 2
the scenario is developed; and 3
(ii) does not take into consideration 4
commitments for national policies and ac-5
tions relating to climate change that, as of 6
the date described in clause (i), have not 7
been implemented. 8
(2) I
NTERNATIONAL COORDINATION .—In devel-9
oping and updating the 3 scenarios required under 10
this subsection, the Board of Governors shall take 11
into consideration analytical tools and best practices 12
developed by international banking supervisors relat-13
ing to climate risks and scenario analysis in an ef-14
fort to develop consistent and comparable data-driv-15
en scenarios. 16
(3) R
ECOMMENDATIONS .—If the Technical De-17
velopment Group determines that the average in-18
crease in global temperatures described in subpara-19
graph (A) or (B) of paragraph (1) is no longer sci-20
entifically valid, the Technical Development Group 21
may recommend that the Board of Governors, in co-22
ordination with the climate science leads, update the 23
average increase in global temperatures described in 24
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the applicable subparagraph to reflect the most cur-1
rent assessment of climate change science. 2
(b) C
ONSIDERATIONS.—In developing and updating 3
each of the 3 scenarios required under subsection (a), the 4
Board of Governors, in coordination with the climate 5
science leads, shall account for physical risks and transi-6
tion risks that may disrupt business operations across the 7
global economy, including through— 8
(1) disruptions with respect to— 9
(A) the sourcing of materials; 10
(B) production; 11
(C) transportation; and 12
(D) the disposal of products and services; 13
(2) changes in the availability and prices of raw 14
materials and other inputs; 15
(3) changes in agricultural production and with 16
respect to food security; 17
(4) direct damages to fixed assets; 18
(5) increases in costs associated with insured or 19
uninsured losses; 20
(6) changes in asset values; 21
(7) impacts on— 22
(A) aggregate demand for products and 23
services; 24
(B) labor productivity; 25
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(C) asset liquidity; and 1
(D) credit availability; 2
(8) mass migration and increases in disease and 3
mortality rates; 4
(9) international conflict, as such conflict re-5
lates to global economic activity and output; and 6
(10) changes in any other microeconomic or 7
macroeconomic condition that the Board of Gov-8
ernors, in coordination with the climate science 9
leads, determines to be relevant. 10
SEC. 6. CLIMATE-RELATED ENHANCED SUPERVISION FOR 11
CERTAIN NONBANK FINANCIAL COMPANIES 12
AND BANK HOLDING COMPANIES. 13
Section 165(i)(1) of the Financial Stability Act of 14
2010 (12 U.S.C. 5365(i)(1)) is amended— 15
(1) in subparagraph (B)(i), by inserting ‘‘except 16
as provided in subparagraph (C)(ii)(I),’’ before 17
‘‘shall provide’’; and 18
(2) by adding at the end the following: 19
‘‘(C) B
IENNIAL TESTS REQUIRED .— 20
‘‘(i) D
EFINITIONS.—In this subpara-21
graph— 22
‘‘(I) the term ‘capital distribu-23
tion’ has the meaning given the term 24
in section 225.8(d)(4) of title 12, 25
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Code of Federal Regulations, as in ef-1
fect on the date of enactment of this 2
subparagraph; 3
‘‘(II) the term ‘capital policy’ has 4
the meaning given the term in section 5
225.8(d)(7) of title 12, Code of Fed-6
eral Regulations, as in effect on the 7
date of enactment of this subpara-8
graph; and 9
‘‘(III) the terms ‘climate science 10
leads’ and ‘covered entity’ have the 11
meanings given those terms in section 12
3 of the Climate Change Financial 13
Risk Act of 2025. 14
‘‘(ii) T
ESTS.— 15
‘‘(I) I
N GENERAL.—The Board of 16
Governors, in coordination with the 17
appropriate primary financial regu-18
latory agencies and the climate 19
science leads, shall conduct biennial 20
analyses in which each covered entity 21
shall be subject to evaluation, under 22
an adverse set of conditions, of wheth-23
er that covered entity has the capital, 24
on a total consolidated basis, nec-25
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essary to absorb financial losses that 1
would arise under each climate change 2
risk scenario developed under section 3
5 of the Climate Change Financial 4
Risk Act of 2025. 5
‘‘(II) I
NITIAL TESTS.—With re-6
spect to each of the first 3 analyses 7
conducted under subclause (I)— 8
‘‘(aa) the covered entity to 9
which such an analysis applies 10
shall not be subject to any ad-11
verse consequences as a result of 12
the analysis; and 13
‘‘(bb) the Board of Gov-14
ernors shall— 15
‘‘(AA) not later than 60 16
days after the date on which 17
the Board of Governors 18
completes the analysis, make 19
a summary of the analysis 20
publicly available; and 21
‘‘(BB) submit a copy of 22
the results of the analysis to 23
the Committee on Banking, 24
Housing, and Urban Affairs 25
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of the Senate and the Com-1
mittee on Financial Services 2
of the House of Representa-3
tives. 4
‘‘(III) C
LIMATE RISK RESOLU -5
TION PLAN.— 6
‘‘(aa) I
N GENERAL.—Except 7
with respect to the first analysis 8
conducted under subclause (I), 9
each covered entity shall, before 10
being subject to an analysis 11
under that subclause, submit to 12
the Board of Governors a resolu-13
tion plan with respect to climate 14
risk planning (referred to in this 15
subclause as a ‘climate risk reso-16
lution plan’), which shall be 17
based on the results of the most 18
recently conducted analysis of the 19
covered entity under that sub-20
clause. 21
‘‘(bb) C
ONTENTS.—Each cli-22
mate risk resolution plan re-23
quired under item (aa) shall in-24
clude— 25
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‘‘(AA) a capital policy 1
with respect to climate risk 2
planning; and 3
‘‘(BB) qualitative and 4
quantitative targets for bal-5
ance sheet and off-balance 6
sheet exposures, and other 7
business operations, that 8
remedy vulnerabilities identi-9
fied in the most recently 10
conducted analysis of the 11
applicable covered entity 12
under subclause (I). 13
‘‘(cc) R
EJECTION.—The 14
Board of Governors may object 15
to a climate risk resolution plan 16
submitted by a covered entity 17
under item (aa) if the Board of 18
Governors determines that— 19
‘‘(AA) the covered enti-20
ty has not demonstrated 21
that such plan is reasonable 22
to maintain capital above 23
each minimum regulatory 24
capital ratio on a pro forma 25
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basis under the adverse set 1
of conditions described in 2
subclause (I); 3
‘‘(BB) the climate risk 4
resolution plan is otherwise 5
not reasonable or appro-6
priate, including because the 7
climate risk resolution plan 8
no longer provides fair serv-9
ices to vulnerable and dis-10
advantaged communities; 11
‘‘(CC) the assumptions 12
and analysis underlying the 13
climate risk resolution plan, 14
or the methodologies and 15
practices that support that 16
plan, are not reasonable or 17
appropriate; or 18
‘‘(DD) the climate risk 19
resolution plan otherwise 20
constitutes an unsafe or un-21
sound practice. 22
‘‘(dd) G
ENERAL DISTRIBU-23
TION LIMITATION.—If the Board 24
of Governors objects to a climate 25
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risk resolution plan submitted by 1
a covered entity under item (aa), 2
the covered entity may not make 3
any capital distribution, other 4
than a capital distribution arising 5
from the issuance of a regulatory 6
capital instrument eligible for in-7
clusion in the numerator of a 8
minimum regulatory capital 9
ratio.’’. 10
SEC. 7. SUB-SYSTEMIC EXPLORATORY SURVEY. 11
(a) D
EVELOPMENT OF SURVEY.—The Board of Gov-12
ernors, in consultation with the Comptroller of the Cur-13
rency and the Board of Directors of the Federal Deposit 14
Insurance Corporation, shall develop a survey to assess— 15
(1) the ability of surveyed entities to withstand 16
each climate risk scenario developed under section 5; 17
(2) which surveyed entities possess a large con-18
centration of business activities in geographical 19
areas or industries that are significantly exposed to 20
the short- and long-term impacts of climate change; 21
and 22
(3) how the surveyed entities identified under 23
paragraph (2) plan to make adaptations to the busi-24
ness models and capital planning of those entities in 25
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•HR 2823 IH
response to the risks presented in each climate 1
change risk scenario developed under section 5. 2
(b) A
DMINISTRATION OFSURVEY.— 3
(1) I
NITIAL ADMINISTRATION.— 4
(A) I
N GENERAL.—Not later than 1 year 5
after the completion of the first analysis under 6
subparagraph (C) of section 165(i)(1) of the Fi-7
nancial Stability Act of 2010 (12 U.S.C. 8
5365(i)(1)), as added by section 6 of this Act, 9
the Board of Governors, in consultation with 10
the Comptroller of the Currency and the Board 11
of Directors of the Federal Deposit Insurance 12
Corporation, shall administer the survey devel-13
oped under subsection (a) to each surveyed en-14
tity. 15
(B) A
SSESSMENT AND REPORT .—Not later 16
than 18 months after the date on which the 17
Board of Governors completes the administra-18
tion of the survey under subparagraph (A), the 19
Board of Governors shall publicly release a re-20
port that— 21
(i) summarizes the results of the sur-22
vey; and 23
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(ii) analyzes whether the planned ac-1
tions of the surveyed entities, in the aggre-2
gate, are plausible and would be effective. 3
(2) S
UBSEQUENT ADMINISTRATION .— 4
(A) I
N GENERAL.—Not later than 2 years 5
after the date on which the Board of Governors 6
releases the report required under paragraph 7
(1)(B), and biennially thereafter, the Board of 8
Governors shall readminister to each surveyed 9
entity the survey developed under subsection 10
(a). 11
(B) S
UBSEQUENT REPORT .—Not later 12
than 180 days after the date on which each sur-13
vey described under subparagraph (A) is com-14
pleted, the Board of Governors shall publicly re-15
lease a report that summarizes the results of 16
the survey, which shall include the analysis de-17
scribed in paragraph (1)(B)(ii). 18
(c) E
FFECT OFSURVEYPARTICIPATION.—In any re-19
port released with respect to a survey conducted under 20
this section, the Board of Governors may not identify any 21
individual surveyed entity that responded to the survey. 22
(d) R
ULE OFCONSTRUCTION.—Nothing in this sec-23
tion may be construed to preclude the Board of Governors 24
from pursuing an enforcement action against a surveyed 25
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entity because of a violation discovered by the Board of 1
Governors during an examination of the surveyed entity 2
that is independent of a survey administered under this 3
section. 4
Æ
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