HB2923 cancels a specific interagency document—the October 24, 2023 “Principles for Climate‑Related Financial Risk Management for Large Financial Institutions”—and forbids the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation from issuing any guidance that is "substantially similar." The bill is narrow in text but broad in effect: it removes a non‑binding supervisory benchmark that many large banks and examiners have used to shape governance, risk management, and disclosure practices for climate‑related exposures.
The practical consequence is immediate legal nullification of a single published document and a statutory prohibition on producing comparable guidance going forward. That changes the regulatory toolkit available to the three agencies, raises questions about how climate risk will be assessed in examinations, and creates ambiguity about what counts as "substantially similar," which could drive litigation or force agencies toward formal rulemaking instead of guidance.
At a Glance
What It Does
The bill declares the named 2023 interagency guidance to have "no force or effect" and expressly bars the Federal Reserve, OCC, and FDIC from issuing any guidance that is "substantially similar." It does not create a new enforcement mechanism, penalties, or alter the agencies' statutory authorities.
Who It Affects
Large federally supervised banks and their risk/compliance functions, the three named federal banking agencies and their examiners, and third parties that relied on the guidance (consultants, auditors, and institutional investors assessing climate risk).
Why It Matters
Removing the guidance alters supervisory expectations used in exams and supervisory communications, potentially reducing regulatory pressure to implement climate‑risk frameworks. It also raises implementation questions because the bill's prohibition is vague and could prompt agencies to use rulemaking or examination letters instead of public guidance.
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What This Bill Actually Does
The bill is short and targeted: it singles out one interagency document — the 2023 "Principles for Climate‑Related Financial Risk Management for Large Financial Institutions" — and wipes it from effect. That document was non‑binding guidance setting out expectations for governance, risk identification, scenario analysis, and disclosure practices tied to climate‑related financial risks.
By nullifying it, Congress (through this bill) would remove a publicly posted set of supervisory principles that examiners and firms had been using as a reference point.
Beyond nullification, the bill forbids the three agencies from issuing any guidance that is "substantially similar." The statutory text does not define "substantially similar," set an administrative process for determining similarity, or establish penalties for non‑compliance. Practically, that leaves unresolved how an agency will proceed if it wants to address climate risk: issue narrower guidance, pursue notice‑and‑comment rulemaking, rely on existing statutes and regulations, or use informal supervisory communications.For supervised institutions, the immediate compliance effect is limited: guidance is not law, so firms already retain discretion to adopt, modify, or retain internal climate‑risk practices.
However, the guidance's removal changes the supervisory yardstick. Examiners will have one less published benchmark when assessing whether a bank's governance and risk management for climate exposures are adequate, which could create inconsistency across districts and exam teams.Finally, the bill's wording creates likely downstream effects.
Agencies that still want to influence industry behavior may translate principles into formal rulemakings or incorporate climate considerations into existing supervisory frameworks under other authorities. That shift would change stakeholder engagement (notice‑and‑comment vs. guidance) and could produce legally enforceable obligations rather than supervisory expectations.
The Five Things You Need to Know
The bill explicitly nullifies the October 24, 2023 interagency document titled "Principles for Climate‑Related Financial Risk Management for Large Financial Institutions.", It names the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation as the agencies affected.
The statute bars those agencies from issuing any guidance that is "substantially similar" to the nullified document but does not define "substantially similar.", The text contains no penalty, enforcement mechanism, or process for determining whether later agency communications violate the prohibition.
The nullification is retroactive to the October 24, 2023 document—removing the guidance's force and effect as of enactment.
Section-by-Section Breakdown
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Nullification and prohibition on substantially similar guidance
This single substantive section accomplishes two things: it declares the specific named interagency guidance to have "no force or effect," and it prevents the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, and the Federal Deposit Insurance Corporation from issuing guidance that is "substantially similar." Mechanically, the provision is terse—it targets one document and imposes a broad, undefined bar on future guidance. The practical implication is that the agencies lose a publicly available set of supervisory principles they could cite in examinations, and they face uncertainty about how to communicate supervisory expectations on climate without running afoul of the statutory prohibition. The lack of definitions or an enforcement path also invites disputes over whether future agency communications (technical letters, interagency statements, examiner handbooks, or rulemakings) cross the statutory line.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Large prudentially supervised banks and financial institutions — they remove a widely‑cited supervisory benchmark that many examiners referenced for governance, scenario analysis, and disclosure expectations, reducing immediate supervisory pressure tied specifically to that document.
- Firms that argued guidance was overbroad or burdensome — nullification reduces the leverage of regulators pushing for voluntary climate‑risk program upgrades tied to the 2023 principles.
- Industry trade groups and lenders with sizeable carbon‑intensive exposures — the bill reduces the likelihood of a uniform supervisory expectation that could accelerate tighter underwriting or portfolio adjustments tied to climate scenarios.
Who Bears the Cost
- The Federal Reserve, OCC, and FDIC exam programs and supervisors — they lose a shared, public reference and may face inconsistent application of climate‑risk expectations across regions or exam teams.
- Investors and market participants seeking standardized climate‑risk disclosures — the removal of these principles may slow convergence toward common supervisory expectations that supported comparability and market discipline.
- Communities and counterparties vulnerable to climate impacts — if agencies step back from issuing supervisory guidance, firms may adopt weaker or uneven climate‑risk practices, increasing potential concentration risk in exposed sectors.
- Regulatory legal teams and compliance departments — ambiguity about what counts as "substantially similar" will increase legal review of communications and may push agencies into costlier rulemaking or defensive drafting.
Key Issues
The Core Tension
The bill pits congressional control over regulatory messaging and industry burdens against regulators' need for flexible, timely tools to identify and manage system‑level risks: it eliminates a non‑binding supervisory benchmark to relieve perceived regulatory overreach, but in doing so it may weaken coordinated supervision of climate‑related financial risk or push agencies into formal rulemaking with different procedural and substantive consequences.
The bill's brevity creates the central implementation problems. It nullifies a named guidance document and bars issuance of anything "substantially similar," but it does not explain how similarity should be judged, whether internal examiner guidance counts, or whether agencies can address climate risk via other supervisory tools or statutes.
That ambiguity means the provision could trigger litigation over scope, invite agency workarounds (for example, translating principles into rulemaking or private supervisory instructions), or produce uneven supervisory outcomes as examiners interpret the prohibition differently.
A second tension concerns regulatory technique. Guidance is attractive to agencies because it allows flexible, quickly updated expectations without notice‑and‑comment rulemaking.
By removing that option for a particular class of content, the bill pushes agencies to choose between (a) doing nothing publicly, (b) using formal rulemaking to establish standards (a slower, legally robust path), or (c) relying on ad hoc supervisory actions and examination judgment. Each choice has trade‑offs in transparency, stakeholder input, and legal defensibility.
The statutory text does not weigh those trade‑offs or provide a mechanism to reconcile competing demands, leaving regulated entities and supervisors to navigate a less predictable landscape.
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