Climate Change Financial Risk Act of 2025

This bill tells the Federal Reserve to study and test how climate change could harm the financial system and the broader economy. The Fed must build three “what‑if” warming scenarios within one year (1.5°C, 2°C, and one based on current policies) and use them to check whether major banks and some nonbank financial firms could handle the losses these changes might cause, such as supply chain problems, damage to property, impacts on food production, and strains on jobs and credit . Lawmakers note that climate change is already bringing more costly disasters and disruptions that threaten financial stability, so this aims to keep the system steady for communities and families .

At first, these tests are information‑only: for the first three rounds there are no penalties, and the Fed must share summaries and send results to Congress. After that, firms must file climate risk plans showing how they will fix weak spots and keep enough capital; if a plan isn’t reasonable, the Fed can object and limit payouts to shareholders until it improves. The bill also creates a 10‑person advisory team (five climate scientists and five economists) to help design the scenarios and publish their work, and it requires a recurring survey of more financial firms, with public summary reports that don’t name individual respondents .

• Who is affected

  • The Federal Reserve, which must develop scenarios, run tests, and report findings.
  • Certain bank holding companies and nonbank financial companies that face regular climate risk checks.
  • Other surveyed financial firms that must answer questions about exposure and plans; the Fed publishes only anonymized results.

• What changes

  • Three climate “what‑if” scenarios built within one year; the Fed considers international best practices and a wide range of real‑world impacts (like supply chains, food, asset values, migration, and credit).
  • Tests every two years for covered firms; first three cycles have no penalties, but results are shared publicly and with Congress.
  • Afterward, firms must submit climate risk plans; weak plans can lead to limits on shareholder payouts until fixed.
  • Ongoing public surveys and reports on broader market exposure to climate risks.

• When

  • Scenarios due within one year of enactment; tests run every two years .
  • The first survey happens within about a year after the first test, with a public report within 18 months; then surveys and reports repeat every two years.