The bill amends the Dodd‑Frank framework to create a permanent Climate Financial Risk Committee inside the Financial Stability Oversight Council (FSOC) and a separate Advisory Committee on Climate Risk. It charges those bodies, working with the Office of Financial Research (OFR), to coordinate agency work, compile climate‑financial data, and produce an initial report within 270 days and an annual assessment thereafter with recommendations to regulators and Congress.
Beyond committees and reporting, the bill directs federal banking agencies and the NCUA to update supervisory guidance to explicitly incorporate climate‑related credit, liquidity, market, operational, and reputational risks for institutions with more than $50 billion in assets, requires FSOC to incorporate climate risk into nonbank SIFI designation guidance, and tasks the Federal Insurance Office (FIO) with collecting zip‑code level homeowners underwriting data and producing insurance sector analyses. The package centralizes cross‑agency coordination and creates specific data and supervisory touchpoints that can alter regulatory expectations for large banks, insurers, nonbank systemically important firms, and state regulators.
At a Glance
What It Does
The bill establishes a standing Climate Financial Risk Committee within FSOC and a 30‑member Advisory Committee to provide external expertise. It requires a coordinated FSOC report within 270 days and annually, updates supervisory guidance for large depository institutions, revises SIFI determination guidance to account for climate risk, and directs FIO to collect and publish granular homeowners insurance data.
Who It Affects
FSOC member agencies and their staff, the Office of Financial Research, federal banking agencies and the NCUA (particularly institutions with >$50 billion in assets), insurers and reinsurers subject to FIO reporting, nonbank firms under potential SIFI review, and state insurance regulators who will receive and use FIO data.
Why It Matters
The bill embeds climate risk into the U.S. financial‑stability apparatus and creates concrete data flows and supervisory expectations. That makes climate exposures visible to regulators and could drive supervisory priorities, designation decisions, disclosure expectations, and insurance market interventions.
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What This Bill Actually Does
The bill inserts three new statutory subsections into the Financial Stability Act of 2010 to make climate financial risk a standing FSOC priority. It creates an internal Climate Financial Risk Committee made up of staff from each FSOC member agency, led by the Council’s Deputy Assistant Secretary, to coordinate across agencies, pool public and agency data (with OFR support), and report regularly to the Council on efforts to integrate climate risk into regulation, supervision, disclosures, and systemic risk assessments.
The statute prevents that internal committee from being terminated or materially modified except by an Act of Congress, signaling permanence.
The separate Advisory Committee on Climate Risk can include up to 30 members drawn from named sources: climate science experts appointed by Energy, EPA, and NSF; climate economics and financial risk experts appointed by the Council (with minimum representation across insurance, capital markets, banking, international markets, housing finance, and asset owners); research and policy NGOs; consumer and labor representatives via the CFPB; investor network designees via the SEC; and other relevant stakeholders—explicitly excluding representatives from the oil and gas industry. Members serve staggered three‑year terms, and the bill sets a high removal bar: members cannot be removed before term end unless two‑thirds of FSOC agency heads vote to do so.On the supervisory side, the bill directs each federal banking agency and the NCUA to update supervisory guidance so that climate‑related credit, liquidity, market, operational, and reputational risks are addressed for supervised institutions with assets greater than $50 billion.
The Financial Institutions Examination Council must coordinate those updates and share guidance with state regulators. FSOC also must update its Code of Federal Regulations guidance on nonbank SIFI determinations to specify how climate risk factors into designation decisions.For insurance markets, the Federal Insurance Office must produce an assessment of climate financial risk to the insurance sector within one year (it may submit this with the FSOC report) and must collect homeowners underwriting data disaggregated by zip code for calendar years 2023 and 2024 and then annually.
The required dataset is granular—premiums, policies, claims, losses, limits, deductibles, nonrenewals, and cancellations—collected directly from insurers under the FIO’s authority and designed to be free of personally identifiable information when released. The bill also expresses a sense of Congress that U.S. agencies should join international bodies focused on climate financial risk where consistent with law.
The Five Things You Need to Know
The Climate Financial Risk Committee cannot be terminated or modified except by an Act of Congress, creating statutory permanence for the internal FSOC coordinating body.
The Advisory Committee is capped at 30 members with a prescribed appointment split: 8 climate science experts appointed by Energy, EPA, and NSF; 8 climate economics/financial experts appointed by the Council with required subject‑matter representation; plus NGO, consumer/labor, and investor designees—and it excludes oil and gas industry stakeholders.
Federal banking agencies and the NCUA must update supervisory guidance to cover climate‑related credit, liquidity, market, operational, and reputational risks for supervised institutions with more than $50,000,000,000 in assets.
FSOC must publish an initial climate financial risk report within 270 days of enactment and then annually; the report must assess data gaps, agency expertise, insurance market effects on housing finance, coordination with state and international regulators, and recommend agency and Congressional actions.
The Federal Insurance Office must collect zip‑code level homeowners underwriting data (premiums, policies, claims, losses, limits, deductibles, nonrenewals, cancellations) for 2023–2024 and then annually, drawing the data directly from insurers under 31 U.S.C. 313 and publishing reports without personally identifiable information.
Section-by-Section Breakdown
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Climate Financial Risk Committee (internal FSOC body)
This provision creates a staff‑level committee inside FSOC led by the Deputy Assistant Secretary of the Council. The committee’s role is operational: identify priority areas, coordinate information sharing, work with OFR to compile public and agency climate‑financial datasets, provide analytical tools, and brief the Council on progress integrating climate risk into supervision, data, disclosures, and systemic assessments. Practically, this centralizes cross‑agency project management and makes OFR the analytics hub for climate‑related work.
Advisory Committee on Climate Risk (external experts)
This section establishes a 30‑member advisory panel with detailed appointment authorities (Energy, EPA, NSF, CFPB, SEC, and the Council) and prescribes disciplinary representation—climate science, climate economics/financial risk, insurance, capital markets, banking, housing finance, asset owners, NGOs, consumer/labor groups, and investor networks. It requires bimonthly meetings with the Council, staggered terms, a high removal threshold (two‑thirds of agency heads), and expressly bars appointments from the oil and gas industry. The setup aims to bring sustained technical advice while insulating membership from removal pressure.
FSOC climate financial risk report
FSOC must publish a coordinated report—first within 270 days and then annually—developed with the Advisory Committee and the Climate Financial Risk Committee. The statute lists specific assessment areas: potential financial stability impacts, agency expertise on climate risk, data quality and gaps, property & casualty insurance trends and their effects on credit and housing finance, nonbank and large bank preparedness, coordination domestically and internationally, and disclosure comparability. The report also must propose recommendations for agencies and Congress, making it an actionable diagnostic rather than a status memo.
Update supervisory guidance for large banks and credit unions
The bill forces federal banking agencies and the NCUA to revise supervisory guidance to include climate‑related credit, liquidity, market, operational, and reputational risks. It targets institutions with assets over $50 billion and requires the Financial Institutions Examination Council to coordinate the guidance across agencies and share it with state regulators—creating a de facto national baseline for supervisory expectations for large depositories and credit unions.
Incorporate climate into nonbank SIFI guidance
FSOC must update the Code of Federal Regulations (12 C.F.R. part 1310, subpart B) to clarify how climate financial risk factors into nonbank SIFI determinations. That directs the Council to make climate exposure an explicit criterion in deciding whether large nonbank firms pose systemic risk—potentially affecting designation decisions for insurers, asset managers, and other large financial firms.
FIO insurance sector assessment and regulatory recommendations
FIO must publish a report within one year assessing climate financial risk to the insurance sector and update prior recommendations. The report can accompany the FSOC report and must include ideas for modernizing supervision and regulation of climate risk in insurance, positioning FIO as the focal point for federal insurance‑sector climate analysis.
FIO homeowners underwriting data collection and dissemination
This provision mandates zip‑code level collection by FIO—premiums, policies, claims, losses, limits, deductibles, nonrenewals, and cancellations—for 2023 and 2024 and then annually, obtained directly from insurers under statutory data authority. FIO must consult NAIC and state commissioners, strip personally identifiable information prior to release, and provide the data and reports to Congressional committees and relevant state regulators on request. The requirement gives regulators a granular view of regional insurance market stress.
International coordination and conforming changes
The bill expresses a nonbinding sense of Congress urging agencies and Treasury to join international initiatives (NGFS, Basel task force) as appropriate. It also updates the Dodd‑Frank table of contents to list the new sections. The sense clause signals congressional intent about international engagement but does not create binding international commitments.
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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
- FSOC member agencies and OFR — receive a statutory coordinating mechanism, prioritized climate‑risk research assignments, and a formal channel for interagency cooperation that should reduce duplicative work and improve data sharing.
- Investors and asset owners — gain access to improved public data and Council assessments that can reduce information asymmetries about regional insurance risk and make climate risk easier to price into portfolios.
- State insurance regulators — obtain granular homeowners underwriting data from FIO and coordinated federal assessments that can inform state regulatory responses to market withdrawal or affordability issues.
- Research and policy community — the advisory committee structure, OFR mandate, and mandated data collection create new opportunities for applied climate‑financial research and model validation using standardized datasets.
Who Bears the Cost
- Insurance companies — must deliver granular, zip‑code level underwriting data for multiple lines and years directly to FIO, which will impose compliance, reporting, and data‑management costs.
- Large banking organizations and large federally supervised credit unions (>$50B) — face expanded supervisory expectations and examinations focused on climate‑related credit, liquidity, market, operational, and reputational risks.
- Potential nonbank SIFIs — entities in sectors like asset management or insurance could face heightened designation risk as FSOC explicitly incorporates climate exposures into its SIFI framework.
- FSOC member agencies and state regulators — will need to allocate staff time and budget to staff the new committees, prepare strategies, coordinate guidance, and respond to enhanced data demands.
Key Issues
The Core Tension
The bill forces a policy choice between making climate risk a central, permanent input into financial‑stability supervision—requiring new data, coordination, and supervisory focus—and limiting regulatory reach and compliance burdens on firms and state systems; it solves the problem of inattention but risks imposing heavy information and supervisory costs, potential mission creep, and politicized adjudication of what counts as climate‑driven financial risk.
The bill centralizes authority and data collection to make climate risk visible to financial regulators but raises implementation challenges. Collecting and standardizing zip‑code level insurance data from many insurers will be technically complex and costly; FIO will need robust data governance to ensure consistency, avoid leakage of sensitive data, and handle state confidentiality regimes.
The statute directs data collection under federal authority, yet state insurance data sharing rules and varying market definitions could complicate completeness and comparability across states.
The advisory committee’s explicit exclusion of oil and gas industry stakeholders reduces direct industry influence but risks narrowing practical perspectives on transition pathways, liability exposures, or regional economic impacts; similarly, high protections for committee membership (staggered terms and a two‑thirds removal bar) increase independence but may reduce accountability or responsiveness. Finally, embedding climate risk into SIFI criteria and supervisory guidance creates legal and economic tradeoffs: regulators gain tools to act on systemic exposures, but those actions could prompt industry pushback, litigation over guidance‑driven expectations, or unanticipated capital and market consequences if supervisory signals are not calibrated carefully.
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