Addressing Climate Financial Risk Act of 2026
- Bill Number
- H.R. 7246
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2026-01-27: Referred to the House Committee on Financial Services.
- Last Updated
- 2026-05-13T08:06:26Z
AI-Generated Summary
Purpose of the Legislation
The Addressing Climate Financial Risk Act of 2026 aims to integrate climate-related risks into the U.S. financial regulatory framework. It establishes specialized committees within the Financial Stability Oversight Council (FSOC, a body created under the Dodd-Frank Act to monitor systemic financial risks) to identify, assess, and mitigate how climate change could threaten financial stability, such as through impacts on banking, insurance, and markets.
Key Provisions
- Climate Financial Risk Committee (Section 2): Creates a new committee within FSOC, led by the Deputy Assistant Secretary, consisting of staff from FSOC member agencies (e.g., Treasury, Federal Reserve). Duties include:
- Identifying priority areas for assessing climate risks to finance.
- Sharing information and developing common standards across agencies.
- Collaborating with the Office of Financial Research to compile data, provide analytical tools, and analyze risks.
- Updating FSOC on progress in areas like regulatory programs, data improvement, disclosures, and risk assessments.
- This committee cannot be terminated or altered without new congressional action.
- Advisory Committee on Climate Risk (Section 2): Establishes a 30-member advisory group to consult with FSOC on climate risk analysis and recommendations. It meets bimonthly. Membership includes:
- 8 climate science experts (appointed by Energy Secretary, EPA Administrator, and NSF Director).
- 8 climate economics or financial risk experts (appointed by FSOC, covering areas like insurance, banking, and asset owners).
- Representatives from research institutions, consumer/labor groups, investor networks, and other stakeholders (excluding oil/gas industry).
- Staggered 1-3 year terms; removal requires 2/3 vote from FSOC agency heads.
- FSOC must consult this group and facilitate best practice sharing; the Office of Financial Research conducts ongoing climate risk research.
- Annual Report on Climate Financial Risk (Section 2): FSOC must publish a report within 270 days of enactment (and yearly thereafter), coordinated with the new committees. It assesses:
- Climate impacts on U.S. financial stability.
- Agency expertise, data quality/gaps, insurance trends affecting credit/housing.
- Risk management by banks and nonbanks, coordination among U.S./state/international regulators.
- U.S. disclosure rules vs. other countries.
- Provides recommendations to regulators and Congress on improving risk mitigation.
- Update to Supervisory Guidance (Section 3): Federal banking agencies (e.g., FDIC, OCC) and the National Credit Union Administration must revise oversight rules to address climate risks (e.g., credit, liquidity, market risks) for institutions with over $50 billion in assets. The Financial Institutions Examination Council ensures coordination and sharing with state regulators.
- Update to Nonbank SIFI Designation (Section 4): FSOC must revise rules for designating "systemically important financial institutions" (nonbanks posing major risks) to include climate financial risks in evaluations.
- Federal Insurance Office Reports (Sections 5-6):
- Within one year, a report assessing climate risks to insurance, updating a 2023 report, and recommending regulatory improvements.
- Another report (within one year, then annually) on homeowners insurance data (e.g., premiums, claims, non-renewals by zip code) for 2023-2024 and later years, collected directly from insurers. Data assesses state-level climate risks to financial stability; shared with Congress/state regulators upon request (without personal info).
- Sense of Congress on Global Coordination (Section 7): Encourages U.S. agencies and Treasury (including Federal Insurance Office) to join international groups like the Network for Greening the Financial System and the Basel Committee's Task Force on Climate-Related Financial Risks, and to collaborate globally consistent with U.S. law.
Significant Changes to Existing Law
- Amends the Financial Stability Act of 2010 (part of Dodd-Frank) by adding sections 121A-121C, introducing permanent committees and reporting mandates focused on climate risks—previously, FSOC addressed general systemic risks without specific climate emphasis.
- Mandates updates to banking supervisory guidance and nonbank designation rules (in 12 CFR Part 1310), embedding climate considerations into routine oversight.
- Requires direct data collection by the Federal Insurance Office under 31 U.S.C. § 313, expanding beyond voluntary reporting and building on 2023 initiatives.
- Adds climate sections to FSOC's annual congressional reports, ensuring ongoing accountability.
Potential Impacts
- On Government Agencies: Increases coordination and workload for FSOC members (e.g., Treasury, Fed, SEC), requiring new expertise, data tools, and reports. Insurance regulators gain better data for oversight, potentially leading to more uniform national approaches.
- On Citizens: Could enhance financial stability by addressing climate-driven risks like insurance shortages or market disruptions, indirectly protecting consumers through safer banking/insurance and more transparent disclosures. Homeowners may benefit from analyzed trends in coverage affordability.
- On International Relations: Promotes U.S. alignment with global standards (e.g., via joining networks), fostering cooperation on cross-border risks without binding commitments, potentially strengthening U.S. influence in international finance.
Main Stakeholders Affected
- Financial Regulators: FSOC agencies, Federal Insurance Office, banking agencies, and state commissioners—gain tools but face new duties.
- Financial Institutions: Banks (> $50B assets), nonbanks, insurers—must manage and disclose climate risks, with potential for stricter supervision.
- Experts and Advocacy Groups: Climate scientists, economists, consumer/labor advocates, investors—participate in advisory roles to shape policy.
- Businesses and Consumers: Commercial entities (excluding oil/gas), homeowners, and investors—benefit from risk mitigation but may see higher compliance costs passed on.
- Congress and States: Receive reports for oversight; states get data sharing for local regulation.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens Dodd-Frank's systemic risk framework by mandating climate integration, with protections like congressional approval for committee changes ensuring durability. Data collection under existing authority (31 U.S.C. § 313) avoids new privacy issues if personally identifiable info is excluded.
- Constitutional: No direct challenges; aligns with Congress's commerce clause powers over financial regulation. Advisory committee structure follows standard federal models (e.g., FACA-like consultation without formal rulemaking).
- Political: Signals bipartisan push (bipartisan sponsors) for climate action in finance, excluding fossil fuel stakeholders to emphasize environmental focus. Could influence future regulations but risks partisan debates on scope; promotes transparency via public reports without overriding state insurance authority.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (14)
Rep. Castor, Kathy [D-FL-14], Rep. Lieu, Ted [D-CA-36], Rep. Mullin, Kevin [D-CA-15], Rep. Bonamici, Suzanne [D-OR-1], Rep. Ansari, Yassamin [D-AZ-3], Rep. Huffman, Jared [D-CA-2], Rep. Stansbury, Melanie A. [D-NM-1], Rep. Velázquez, Nydia M. [D-NY-7], Rep. Brownley, Julia [D-CA-26], Rep. Evans, Dwight [D-PA-3], Rep. Min, Dave [D-CA-47], Rep. Goldman, Daniel S. [D-NY-10], Rep. Levin, Mike [D-CA-49], Rep. Magaziner, Seth [D-RI-2]
Recent Actions
- 2026-01-27: Referred to the House Committee on Financial Services.
- 2026-01-27: Introduced in House
- 2026-01-27: Introduced in House
Bill Versions
- Addressing Climate Financial Risk Act of 2026 — issued 2026-01-27 — PDF (13 pages)