HR7246-119

What This Bill Does

The Addressing Climate Financial Risk Act embeds climate risk into financial stability oversight. It creates an FSOC Climate Financial Risk Committee of member-agency staff to identify priority risk areas, coordinate common approaches, collaborate with the Office of Financial Research on climate and financial data, and update FSOC on regulatory, data, disclosure, and financial-stability work. It creates an Advisory Committee on Climate Risk with up to 30 members, including climate scientists appointed by Energy, EPA, and NSF; climate economics and financial-risk experts appointed by FSOC; non-governmental research experts; consumer or labor representatives; investor or shareholder advocacy representatives; and other financial or business stakeholders excluding oil and gas industry stakeholders. FSOC must publish a climate financial risk report within 270 days and annually, assessing financial stability, agency expertise, data gaps, insurance availability and affordability, bank and nonbank risk management, federal and State coordination, international coordination, and disclosure regimes, with recommendations to regulators and Congress. Banking agencies and NCUA must update supervisory guidance for institutions above $50 billion in assets to cover credit, liquidity, market, operational, and reputational climate risk, coordinated through FFIEC and shared with State regulators. FSOC must update nonbank SIFI designation guidance to incorporate climate financial risk. The Federal Insurance Office must report within one year on insurance-sector climate risk and the 2023 FIO recommendations, then collect homeowners insurance underwriting data from insurers by zip code, including premiums, policies, claims, losses, limits, deductibles, non-renewals, and cancellations, report to Congress, State commissioners, and the public, and avoid personally identifiable information.

Who Benefits and How

Financial regulators, climate-risk analysts, investors, homeowners, insurance regulators, consumer advocates, labor groups, shareholder advocates, and communities exposed to climate-related insurance disruption benefit from coordinated data, advisory expertise, annual reports, supervisory guidance, disclosure work, and granular insurance-market information. Regulators gain a statutory structure for identifying climate risks to banks, insurers, housing finance, credit markets, and nonbank financial companies.

Who Bears the Burden and How

FSOC member agencies, OFR, Federal banking agencies, NCUA, FFIEC, banks above $50 billion, nonbank financial companies, insurance companies, FIO staff, State insurance regulators, oil producers, gas producers, and federal taxpayers face committee participation, data compilation, supervisory guidance, reporting, insurance data-call, climate-risk-management, and compliance burdens. Oil and gas stakeholders are excluded from the advisory committee's stakeholder seats.

Key Provisions

• Creates an FSOC Climate Financial Risk Committee to coordinate agency approaches, data, software, disclosures, and financial-stability work.
• Creates a 30-member Advisory Committee on Climate Risk with climate science, finance, consumer, labor, investor, and stakeholder expertise.
• Excludes oil and gas industry stakeholders from the Advisory Committee's stakeholder category.
• Requires FSOC climate financial risk reports within 270 days and annually thereafter.
• Requires banking agencies and NCUA to update supervisory guidance for institutions above $50 billion in assets.
• Requires FSOC to update nonbank SIFI designation guidance to incorporate climate financial risk.
• Requires FIO insurance-sector climate-risk reports and zip-code-level homeowners insurance data collection and publication.