Sponsors (8)
This bill strengthens financial-system resilience to climate risks through standardized, science-based stress scenarios and regular assessments—improving transparency and planning—at the cost of increased compliance, potential higher borrowing costs or reduced credit availability, and added regulatory uncertainty that may disproportionately affect smaller firms, energy-dependent communities, and some consumers.
Taxpayers and the public: regulators and large financial firms will identify climate-driven vulnerabilities earlier, reducing systemic financial risk and the chance of large-scale disruptions to the financial system.
Large banks and covered financial firms: will have clearer, standardized rules, definitions, and science-based scenarios to assess and manage climate-related financial risks, reducing legal uncertainty for supervised firms and supervisors.
Financial institutions, state and local governments: coordinated development and public release of standardized climate risk scenarios and technical guidance will increase transparency and provide comparable data for stress tests, capital planning, and public planning.
Consumers, households, and small businesses: banks and financial firms will face new compliance, modeling, reporting, and capital-planning costs that are likely to be passed on through higher fees, reduced credit availability, or higher borrowing costs.
Households and small businesses: if stress tests lead to higher required capital, lenders may reduce lending or charge more, tightening credit and raising borrowing costs for consumers and small firms.
Energy workers, small businesses, and rural communities: emphasis on transition risks and potential shifts away from fossil fuels can accelerate economic disruption for communities and workers dependent on fossil-fuel industries.
Based on analysis of 7 sections of legislative text.
Requires the Fed to develop climate risk scenarios, run biennial climate stress tests of very large financial firms, create a technical advisory group, and survey other large supervised firms.
Introduced April 10, 2025 by Brian Emanuel Schatz · Last progress April 10, 2025
Requires the Federal Reserve to build standardized climate-change risk scenarios, form a technical advisory group of climate scientists and economists, and use those scenarios to run biennial climate-related stress tests of the largest bank holding companies and large nonbank financial firms. It also requires confidential surveys of other supervised firms to assess concentrated exposures and planned business-model or capital responses, with public summaries and aggregated analysis of survey results. Sets asset-size thresholds for which firms are subject to stress tests or surveys, defines key climate and supervisory terms, directs coordination with other regulators and designated federal climate science officials, and requires scenario design to cover defined physical and transition risks and to aim for international comparability of analytical tools.