II 

117TH CONGRESS 

1ST SESSION S. 3167 

To amend the Bank Holding Company Act of 1956 and the Dodd-Frank 

Wall Street Reform and Consumer Protection Act to require disclosure 

of certain financed emissions, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 4, 2021 

Mr. MARKEY (for himself and Mr. MERKLEY) introduced the following bill; 

which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Bank Holding Company Act of 1956 and 

the Dodd-Frank Wall Street Reform and Consumer Protection Act to require disclosure of certain financed emissions, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Fossil Free Finance 

5 Act’’. 


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1 SEC. 2. ALIGNMENT OF FINANCED EMISSIONS WITH 

2 SCIENCE-BASED TARGETS. 

3 The Bank Holding Company Act of 1956 (12 U.S.C. 

4 1841 et seq.) is amended by adding at the end the fol5 lowing: 

6 ‘‘SEC. 15. ALIGNMENT OF FINANCED EMISSIONS WITH 

7 SCIENCE-BASED TARGETS. 

8 ‘‘(a) DEFINITIONS.—In this section: 

9 ‘‘(1) COVERED BANK HOLDING COMPANY.—The 

10 term ‘covered bank holding company’ means a bank 

11 holding company with total consolidated assets equal 

12 to or greater than $50,000,000,000. 

13 ‘‘(2) DEFORESTATION RISK COMMODITIES.— 

14 The term ‘deforestation risk commodities’ means 

15 globally traded goods and raw materials— 

16 ‘‘(A) that originate from natural forest 

17 ecosystems, either— 

18 ‘‘(i) directly from within forest areas; 

19 or 

20 ‘‘(ii) from areas previously under for21 est cover; and 

22 ‘‘(B) the extraction or production of which 

23 contributes significantly to the conversion of 

24 natural forest to agriculture, tree plantation, or 

25 other non-forest land use. 


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1 ‘‘(3) FINANCED EMISSIONS.—The term ‘fi2 nanced emissions’ means, with respect to a covered 

3 bank holding company, and any nonbank financial 

4 company, the share of the emissions of such com5 pany attributable to investment in, or the providing 

6 of financial services to, a company or project of a 

7 company, including— 

8 ‘‘(A) investments in a debt or equity in9 vestment in such another company or the assets 

10 of such another company; 

11 ‘‘(B) project finance investment; 

12 ‘‘(C) underwriting; 

13 ‘‘(D) syndication or securitization of loans 

14 or asset-backed securities; 

15 ‘‘(E) derivative transactions related to fi16 nancing or hedging; and 

17 ‘‘(F) market making. 

18 ‘‘(4) FOSSIL FUEL FINANCING.—The term ‘fos19 sil fuel financing’ means, with respect to a covered 

20 bank holding company, investment in— 

21 ‘‘(A) a company that derives 15 percent or 

22 more of revenue from exploration, extraction, 

23 processing, exporting, transporting, and any 

24 other significant action with respect to oil, nat25 ural gas, coal, or any byproduct thereof; or 


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1 ‘‘(B) a fossil fuel project. 

2 ‘‘(5) FOSSIL FUEL PROJECT.—The term ‘fossil 

3 fuel project’ means a project intended to— 

4 ‘‘(A) facilitate or expand exploration, ex5 traction, processing, exporting, transporting, or 

6 any other significant action with respect to oil, 

7 natural gas, coal; or 

8 ‘‘(B) construct any infrastructure related 

9 to the activities in subparagraph (A), such as 

10 wells, pipelines, terminals, refineries, or utility11 sale generation facility. 

12 ‘‘(6) NATURAL FOREST.—The term ‘natural 

13 forest’ means a natural arboreal ecosystem that— 

14 ‘‘(A) has a species composition a signifi15 cant percentage of which is native species; and 

16 ‘‘(B) contains a tree canopy cover of more 

17 than 10 percent over an area of not less than 

18 0.5 hectares. 

19 ‘‘(7) NEW OR EXPANDED FOSSIL FUEL

20 PROJECT.—The term ‘new or expanded fossil fuel 

21 project’ means a fossil fuel project that would in22 crease the— 

23 ‘‘(A) level of proven or developable oil, nat24 ural gas or coal reserves; 


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1 ‘‘(B) midstream throughput of pipelines, 

2 terminals or refineries; or 

3 ‘‘(C) combustion of oil, natural gas or coal 

4 for utility-scale electricity generation. 

5 ‘‘(b) REQUIREMENTS.—Not later than 210 days after 

6 the date of the enactment of this subsection, and not less 

7 than once every 2 years thereafter, a covered bank holding 

8 company shall— 

9 ‘‘(1) submit to the Board an emission reduction 

10 plan for reducing emissions in accordance with this 

11 section; and 

12 ‘‘(2) if the plan is accepted under subsection 

13 (d), implement such plan. 

14 ‘‘(c) ELEMENTS OF PLAN.—Each plan required 

15 under subsection (b)(1)— 

16 ‘‘(1) shall include— 

17 ‘‘(A) a plan for the covered bank holding 

18 company to reach zero financed emissions by 

19 January 1, 2050; 

20 ‘‘(B) a plan to reduce the financed emis21 sions of the bank holding company by 50 per22 cent by January 1, 2030; 

23 ‘‘(C) a plan to discontinue new or ex24 panded fossil fuel projects not later than Janu25 ary 1, 2023; 


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1 ‘‘(D) a plan for the covered bank holding 

2 company to discontinue thermal coal financing 

3 by January 1, 2025; 

4 ‘‘(E) a plan for the covered bank holding 

5 company to discontinue fossil fuel financing by 

6 January 1, 2030; and 

7 ‘‘(F) a plan for the covered bank holding 

8 company to eliminate financing of deforestation 

9 risk commodities;‘‘ 

10 ‘‘(G) such other requirements as the Board 

11 determines is necessary to protect the financial 

12 stability of the United States; 

13 ‘‘(2) may not include carbon offsets; 

14 ‘‘(3) may include proven negative carbon emis15 sion technologies to meet the requirements under 

16 paragraph (1)(A) alone, provided that these projects 

17 do not negatively impact low-income, minority, or in18 digenous communities; 

19 ‘‘(4) shall prioritize— 

20 ‘‘(A) the covered bank holding company 

21 withdrawing funding from companies and 

22 projects that have a disproportionately negative 

23 impact on health and well-being of low-income 

24 and minority communities; and 


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1 ‘‘(B) lending to companies for purposes of 

2 carrying out severance, retraining, and other 

3 benefits to workers impacted by the transition 

4 to zero financed emissions. 

5 ‘‘(d) CONSIDERATION OF PLAN.—Not later than 6 

6 months after receiving a plan under subsection (b)(1), the 

7 Board shall— 

8 ‘‘(1) accept the plan; or 

9 ‘‘(2) reject the plan if it does not align with 

10 science-based targets without the use of offsets or 

11 unproven carbon emission reduction technologies and 

12 require the covered bank holding company to revise 

13 such plan in accordance with the suggestions of the 

14 Board. 

15 ‘‘(e) PENALTIES.—In the case of a covered bank 

16 holding company that does not submit a plan in accord17 ance with this section or meet the requirements set out 

18 in such a plan— 

19 ‘‘(1) the Board shall— 

20 ‘‘(A) apply the penalties under section 8, 

21 through procedures prescribed by the Board by 

22 rule; 

23 ‘‘(B) require divestiture of assets in order 

24 to bring the financed emissions of a covered 


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1 bank holding company into compliance with the 

2 requirements set out in such a plan; and 

3 ‘‘(C) notify the Board of Directors of the 

4 Federal Deposit Insurance Corporation of the 

5 noncompliance of such covered bank holding 

6 company; and 

7 ‘‘(2) the Board of Directors of the Federal De8 posit Insurance Corporation may, with respect to 

9 any covered bank holding company described in 

10 paragraph (2)(B) or a subsidiary of such bank hold11 ing company that contributes to the failure of such 

12 covered bank holding company to comply with this 

13 section— 

14 ‘‘(A) terminate insurance under section 

15 8(a)(2) of the Federal Deposit Insurance Act 

16 (12 U.S.C. 1818(a)(2)); and 

17 ‘‘(B) carry out any other corrective action 

18 available under section 38 of the Federal De19 posit Insurance Act (12 U.S.C. 1831o). 

20 ‘‘(f) REGULATIONS.—Not later than 180 days after 

21 the date of the enactment of this section, the Board shall 

22 issue regulations establishing the format and timing for 

23 submission of the plans required under this section.’’. 


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1 SEC. 3. CONTRIBUTION TO CLIMATE CHANGE INCLUDED IN 

2 FSOC DESIGNATION. 

3 (a) AUTHORITY TO REQUIRE SUPERVISION AND

4 REGULATION OF CERTAIN NONBANK FINANCIAL COMPA5 NIES.—Section 113 of the Dodd-Frank Wall Street Re6 form and Consumer Protection Act (12 U.S.C. 5323) is 

7 amended— 

8 (1) in subsection (a)(2)— 

9 (A) in subparagraph (J), by striking ‘‘and’’ 

10 at the end; 

11 (B) by redesignating subparagraph (K) as 

12 subparagraph (L); and 

13 (C) by inserting after subparagraph (J) 

14 the following: 

15 ‘‘(K) the extent to which the company 

16 makes a non-trivial contribution to the financed 

17 emissions (as defined in section 15 of the Bank 

18 Holding Company Act of 1956) of the financial 

19 system of the United States;’’; and 

20 (2) in subsection (b)(2)— 

21 (A) in subparagraph (J), by striking ‘‘and’’ 

22 at the end; 

23 (B) by redesignating subparagraph (K) as 

24 subparagraph (L); and 

25 (C) by inserting after subparagraph (J) 

26 the following: 


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1 ‘‘(K) the extent to which the company 

2 makes a non-trivial contribution to the financed 

3 emissions (as defined in section 15 of the Bank 

4 Holding Company Act of 1956) of the financial 

5 system of the United States; and’’. 

6 (b) ENHANCED SUPERVISION AND PRUDENTIAL

7 STANDARDS FOR NONBANK FINANCIAL COMPANIES SU8 PERVISED BY THE BOARD OF GOVERNORS AND CERTAIN

9 BANK HOLDING COMPANIES.— 

10 (1) DEVELOPMENT OF PRUDENTIAL STAND11 ARDS.—Section 115(b)(1) of the Dodd-Frank Wall 

12 Street Reform and Consumer Protection Act (12 

13 U.S.C. 5325(b)(1)) is amended— 

14 (A) in subparagraph (H), by striking 

15 ‘‘and’’; 

16 (B) in subparagraph (I), by striking the 

17 period at the end and inserting ‘‘; and’’; and 

18 (C) by adding at the end the following: 

19 ‘‘(J) divestiture of financed emissions (as 

20 defined in section 15 of the Bank Holding Com21 pany Act of 1956).’’. 

22 (2) REQUIRED STANDARDS.—Section 

23 165(b)(1)(A) of the Dodd-Frank Wall Street Reform 

24 and Consumer Protection Act (12 U.S.C. 

25 5365(b)(1)(A)) is amended— 


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1 (A) in clause (iv), by striking ‘‘and’’; 

2 (B) in clause (v), by striking the period 

3 and inserting ‘‘; and’’; and 

4 (C) by adding at the end the following: 

5 ‘‘(vi) emissions reduction plans in ac6 cordance with section 15 of the Bank 

7 Holding Company Act of 1956 (12 U.S.C. 

8 1841 et seq.).’’. 

9 SEC. 4. REPORTS. 

10 (a) DEFINITIONS.—In this section: 

11 (1) COVERED BANK HOLDING COMPANY.—The 

12 term ‘‘covered bank holding company’’ means a bank 

13 holding company with total consolidated assets equal 

14 to or greater than $50,000,000,000. 

15 (2) FINANCED EMISSIONS.—The term ‘‘fi16 nanced emissions’’ means, with respect to a covered 

17 bank holding company, and any nonbank financial 

18 company, the share of the emissions of such com19 pany attributable to investment in, or the providing 

20 of financial services to, a company or project of a 

21 company, including— 

22 (A) investments in a debt or equity invest23 ment in such another company or the assets of 

24 such another company; 

25 (B) project finance investment; 


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1 (C) underwriting; 

2 (D) syndication or securitization of loans 

3 or asset-backed securities; 

4 (E) derivative transactions related to fi5 nancing or hedging; and 

6 (F) market making. 

7 (3) SCIENCE-BASED EMISSIONS TARGETS.—The 

8 term ‘‘science-based emissions targets’’ means reduc9 tion in greenhouse gas emissions consistent with pre10 venting an increase in global average temperature of 

11 greater than or equal to 1.5 degrees Celsius com12 pared to pre-industrial levels. 

13 (b) INITIAL REPORT.—Not later than 180 days after 

14 the date of the enactment of this subsection, the Board 

15 of Governors of the Federal Reserve System shall submit 

16 a report to Congress that— 

17 (1) identifies current level of financed emissions 

18 in the financial system of the United States; 

19 (2) includes an analysis of trends in financed 

20 emissions reductions; 

21 (3) includes a summary of the commitments of 

22 covered bank holding companies to reduce financed 

23 emissions; 


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1 (4) estimates the financed emissions in the fi2 nancial system of the United States needed to meet 

3 science-based emissions targets; 

4 (5) identifies regulatory gaps in reducing fi5 nanced emissions that cannot be addressed with au6 thorities of the Board and recommendations for ad7 dressing such gaps; 

8 (6) identifies data quality challenges for assess9 ing financed emissions and recommendations to ad10 dress those challenges; 

11 (7) identifies the equitable transition needs for 

12 workers and communities that will be impacted by a 

13 shift to a zero financed emissions economy; 

14 (8) analyzes— 

15 (A) the number and groups of people af16 fected by a transition to zero financed emis17 sions; and 

18 (B) the economic impact of such a transi19 tion with respect to such groups; and 

20 (9) identifies regulatory and legislative options 

21 for mitigating the economic impacts described in 

22 paragraph (8)(B), including— 

23 (A) the use of existing authorities, includ24 ing the Community Reinvestment Act of 1977 

25 (12 U.S.C. 2901 et seq.) and emergency lendVerDate Sep 11 2014 04:04 Nov 05, 2021 Jkt 029200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S3167.IS S3167

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1 ing powers under section 13 of the Federal Re2 serve Act (12 U.S.C. 342); and 

3 (B) the establishment of a public invest4 ment bank to finance investment in an equi5 table transition to a zero financed emissions 

6 economy. 

7 (c) PERIODIC REPORT.—Not later than 180 days 

8 after the date of the enactment of this subsection and not 

9 less than once every 2 years thereafter, the Board of Gov10 ernors of the Federal Reserve System shall submit a re11 port to Congress that includes— 

12 (1) an analysis of the progress against aligning 

13 with financed emissions targets; 

14 (2) the estimates described in subsection (b)(4); 

15 and 

16 (3) an analysis of the progress made in the pre17 ceding 2 years towards an equitable transition to a 

18 zero financed emissions economy; and 

19 (4) recommendations with respect to assistance 

20 Congress and other Federal agencies may provide 

21 to— 

22 (A) facilitate a reduction of financed emis23 sions; and 

24 (B) support an equitable transition to a 

25 zero financed emissions economy. 


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1 (d) COLLECTION OF DATA.—The Board of Governors 

2 of the Federal Reserve System shall collect such data as 

3 needed from bank holding companies to carry out the re4 ports under this section. 

Æ 


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