Sponsors (11)
The bill strengthens financial-system resilience to climate risks through standardized scenarios, stress tests, capital rules, and public tools—reducing bailout risk and improving transparency—but does so at the cost of added compliance and supervisory burdens that could raise costs for consumers and squeeze smaller banks and some communities.
Banks, large nonbank financial firms, and their supervisors will be required to run standardized climate stress tests, hold capital against adverse climate scenarios, and prepare resolution plans—strengthening the resilience of the financial system against climate-driven shocks.
Taxpayers and households stand to benefit from reduced systemic risk because improved scenario analysis and preparedness lower the likelihood of taxpayer-funded bailouts of large firms.
Financial institutions, state and local governments, and nonprofits will gain access to publicly available, science-based scenarios, data, and methods—improving transparency, enabling independent scrutiny, and supporting consistent supervision.
Consumers, borrowers, and taxpayers will likely bear higher costs because increased compliance, analytic work, and capital requirements for covered firms tend to be passed through as higher fees, reduced lending, or other charges.
Regional and smaller banks—and the businesses and households they serve—could face concentrated costs and tighter capital/supervisory expectations that reduce lending in rural and underserved communities.
Smaller banks and nonbank firms designated as covered (or those near thresholds) may suffer competitive disadvantages and uneven regulatory burdens compared with firms not covered.
Based on analysis of 7 sections of legislative text.
Requires the Federal Reserve to produce climate risk scenarios, run biennial climate stress tests for large financial firms, create an expert technical group, and survey large supervised firms about exposures and adaptation plans.
Requires the Federal Reserve to create standardized climate-change risk scenarios (including 1.5°C and 2.0°C pathways and a policy-based scenario), form a 10-member technical advisory group of climate scientists and economists, and run biennial climate-related stress tests for large bank holding companies and designated nonbank financial firms. The Fed must also survey large supervised firms about climate exposure and publish public reports while coordinating with other regulators and preserving examination and enforcement authority.
Introduced April 10, 2025 by Sean Casten · Last progress April 10, 2025