Sponsors (11)
The bill strengthens financial-system resilience to climate risks through standardized scenarios, stress tests, surveys, and capital planning—improving transparency and early detection of systemic risks—but it also imposes compliance and capital costs on large firms that may be passed to consumers, could reduce credit/insurance availability in exposed regions, and introduces regulatory uncertainties and some governance trade-offs.
Depositors, investors, and the broader public benefit from reduced risk of financial-system failures because banks and covered nonbank firms must use climate scenarios, undergo stress tests, and plan for consolidated capital to withstand climate-driven losses.
Regulators, markets, and investors gain clearer, standardized, science‑based scenarios and definitions that improve comparability across firms and consistency in supervision and risk management.
Regular surveys and public summary reports provide better data and ongoing monitoring of climate-related exposures, enabling earlier detection of systemic risks and more informed public and private decision‑making.
Large banks and covered nonbank financial firms will face substantial new compliance costs and potential capital-holding requirements, costs that are likely to be partly passed on to consumers through higher borrowing costs, fees, or reduced credit availability.
Stricter capital constraints, scenario-driven underwriting changes, and public reporting could make lending or insurance more expensive or scarcer in high‑risk coastal, rural, or otherwise exposed regions, harming homeowners, small businesses, and local economies.
Regulatory uncertainty — from Board discretion over thresholds (e.g., the $100B decision), evolving scenario assumptions (1.5°C/2.0°C updates), and potential changes in covered scope — could make planning difficult for firms and create market unpredictability during the transition.
Based on analysis of 7 sections of legislative text.
Directs the Federal Reserve to build climate-change stress-test scenarios, run biennial capital tests for the largest banks/nonbank firms, create a technical advisory group, and survey large supervised firms.
Introduced April 10, 2025 by Sean Casten · Last progress April 10, 2025
Requires the Federal Reserve, with other regulators and climate science agencies, to build standardized climate-change stress-test scenarios and use them to run recurring, confidential capital-adequacy analyses of the largest banks and designated nonbank financial firms. Creates a 10-member technical development group of climate scientists and economists to design scenarios and tools, directs the Fed to publish scenario work products and resources, and mandates a recurring confidential survey of large supervised firms about concentrated exposures and adaptation plans.