Sponsors (11)
This bill aims to reduce systemic climate risk and improve transparency by forcing standardized, science‑based scenario analysis, stress tests, and public reporting—strengthening financial stability and community planning—but it also raises compliance and capital costs, may tighten credit/insurance availability in high‑risk areas, and introduces regulatory and governance uncertainties that could be passed on to consumers.
Financial institutions (banks, insurers, and large nonbank firms) and the broader financial system will face recurring, science‑based scenario stress tests, consolidated capital planning, and regular surveys that reduce the chance of climate-driven failures and improve overall financial stability.
Regulators, markets, and the public will get clearer, standardized data and public reports (including underlying data and summaries) that improve transparency about systemic climate exposures and enable more informed investment, supervisory, and community planning decisions.
Banks and large financial firms will operate under clearer, standardized climate‑risk definitions and a formal interagency scientific input process (NOAA, EPA, DOE, NASA, etc.), improving supervisory consistency and the scientific basis for regulation.
Covered banks and large financial firms will incur new compliance, reporting, and capital‑holding costs that are likely to be passed on to consumers and borrowers (higher fees, lending costs, or insurance premiums).
Stricter scenario-driven capital, underwriting standards and public reporting can make credit and insurance more expensive or harder to obtain in high‑risk regions (coastal, rural, or disaster‑prone areas), shifting costs and reducing coverage where resilience is most needed.
Board discretion on coverage thresholds, the ability to add agencies, and evolving science‑driven scenario assumptions create regulatory unpredictability that can complicate firms' capital planning and business strategies.
Based on analysis of 7 sections of legislative text.
Directs the Federal Reserve to create standardized climate scenarios and run biennial climate stress tests and surveys of very large banks and major supervised firms.
Official title: 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 purposes.
Introduced April 10, 2025 by Sean Casten · Last progress April 10, 2025
Requires the Federal Reserve to create standardized climate-change risk scenarios and use them to run recurring stress tests of the largest banks and designated nonbank financial companies, plus confidential surveys of large supervised firms. The bill sets asset-based thresholds for covered firms, creates a 10-member technical advisory group of climate scientists and economists to design scenarios and methods, and requires public summaries of scenario work and survey results while keeping individual firm responses confidential.