This bill tells the Federal Reserve to study how climate change could hurt the financial system and to share what it learns. It sets up a new expert group of climate scientists and economists to help build three “what if” scenarios (for 1.5°C, 2°C, and the most likely path based on current actions) and to make tools that banks and others can use. These scenarios must consider things like damaged property, supply chain problems, higher insurance losses, and changes in energy and food costs. The Fed can update the scenarios as science changes, and it should look at best practices used abroad. Public summaries of findings are required to increase transparency .

Large banks and some big nonbank financial firms will face checkups every two years to see if they have enough capital to handle losses under the climate scenarios. After the first round (which has no penalties), firms must submit plans to fix any weak spots. If a plan isn’t good enough—especially if it would lead to unfair service for vulnerable communities—the Fed can object and may restrict payouts to shareholders until problems are addressed. The Fed will also survey a wider group of banks to spot hot spots, publish overall results (without naming individual firms), and repeat this on a regular schedule. The goal is to prevent shocks that could raise borrowing costs or disrupt basic services in hard-hit areas. This work responds to rising extreme weather costs and gaps in current stress tests, which haven’t fully reflected climate risks to date .

• Who is affected: Big banks, some large finance companies, and other surveyed banks and firms nationwide .
• What changes: New climate risk scenarios; regular tests and firm plans to handle losses; public summaries; surveys to track risk in communities and industries .
• When: Scenarios must be created within a year of enactment; tests and surveys follow on a biennial cycle, with the first test round having no penalties and public summaries posted within 60 days .