Senator Dianne Feinstein (D-Calif.) and Representative Sean Casten (D-Ill.) introduced the bipartisan Addressing Climate Financial Risk Act today. This bill would improve the ability of federal regulators to understand and mitigate risks from climate change within the financial system.
As per Senator Feinstein’s press release, the key provisions of the Act include:
- Establish an advisory committee on climate financial risk: The bill would establish a permanent committee on the Financial Stability Oversight Council (FSOC) made up of experts in climate science, climate economics and climate financial risk. The committee would advise FSOC, including in producing a report that would include recommendations on how to improve the ability of the U.S. financial regulatory system to identify and mitigate climate risk.
- Update supervisory guidance on climate risk: The bill would require federal bank and credit union regulatory agencies to update their supervisory guidance to include climate risk and to develop a strategy to identify and mitigate climate financial risk.
- Update non-bank designation guidance: The bill would require FSOC to specify how it will incorporate climate risk into its decisions about whether to designate risky non-bank financial institutions as requiring additional oversight by the Federal Reserve.
- Require a Federal Insurance Office (FIO) report on insurance regulation and climate risk: The insurance industry is more directly affected by climate risk than other areas of the financial system. This provision would require the FIO to produce a report on how to modernize and improve climate risk insurance regulation in the United States. The report would be modeled on FIO’s 2013 report on modernizing state insurance regulation.
- Improve global coordination: Climate change is a global problem that requires international coordination. This provision would provide a sense of Congress that U.S. financial regulators should join the Network for Greening the Financial System, formally join the Basel Committee’s Task Force on Climate-Related Risk and work with international regulators on climate financial risk to the extent possible.
NWC supports this critical legislation. Climate changes poses a threat to the stability of the entire U.S. financial system, and it is crucial that financial regulators approach its risks in a comprehensive way. You can learn more about our multi-pronged Climate Corruption Campaign, which includes addressing systemic climate risks, here.