fort to develop consistent and comparable data-driv-
en scenarios. 
(4) RECOMMENDATIONS.—If the Technical De-
velopment Group determines that the average in-
crease in global temperatures described in subpara-
graph (A) or (B) of paragraph (1) is no longer sci-
entifically valid, the Technical Development Group 
may recommend that the Board of Governors, in co-
ordination with the climate science leads, update the 
average increase in global temperatures described in 
the applicable subparagraph to reflect the most cur-
rent assessment of climate change science. 
(b) CONSIDERATIONS.—In developing and updating 
each of the 3 scenarios required under subsection (a), the 
Board of Governors, in coordination with the climate 
science leads, shall account for physical risks and transi-
tion risks that may disrupt business operations across the 
global economy, including through— 
(1) disruptions with respect to— 
(A) the sourcing of materials; 
(B) production; and 
(C) the disposal of products and services; 
(2) changes in the availability and prices of raw 
materials and other inputs; 
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(3) changes in agricultural production and with 
respect to food security; 
(4) direct damages to fixed assets; 
(5) increases in costs associated with insured or 
uninsured losses; 
(6) changes in asset values; 
(7) impacts on— 
(A) aggregate demand for products and 
services; 
(B) labor productivity; 
(C) asset liquidity; and 
(D) credit availability; 
(8) mass migration and increases in disease and 
mortality rates; 
(9) international conflict, as such conflict re-
lates to global economic activity and output; and 
(10) changes in any other microeconomic or 
macroeconomic condition that the Board of Gov-
ernors, in coordination with the climate science 
leads, determines to be relevant. 
SEC. 6. CLIMATE-RELATED ENHANCED SUPERVISION FOR 
CERTAIN NONBANK FINANCIAL COMPANIES 
AND BANK HOLDING COMPANIES. 
Section 165(i)(1) of the Financial Stability Act of 
2010 (12 U.S.C. 5365(i)(1)) is amended— 
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(1) in subparagraph (B)(i), by inserting ‘‘except 
as provided in subparagraph (C)(ii)(I),’’ before 
‘‘shall provide’’; and 
(2) by adding at the end the following: 
‘‘(C) BIENNIAL TESTS REQUIRED.— 
‘‘(i) DEFINITIONS.—In this subpara-
graph— 
‘‘(I) the term ‘capital distribu-
tion’ has the meaning given the term 
in section 225.8 of title 12, Code of 
Federal Regulations, as in effect on 
the date of enactment of this subpara-
graph; 
‘‘(II) the term ‘capital policy’ has 
the meaning given the term in section 
225.8(d)(8) of title 12, Code of Fed-
eral Regulations, as in effect on the 
date of enactment of this subpara-
graph; and 
‘‘(III) the terms ‘climate science 
leads’ and ‘covered entity’ have the 
meanings given those terms in section 
3 of the Climate Change Financial 
Risk Act of 2019. 
‘‘(ii) TESTS.— 
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‘‘(I) IN
GENERAL.—Subject to 
the other requirements of this clause, 
the Board of Governors, in coordina-
tion with the appropriate primary fi-
nancial regulatory agencies and the 
climate science leads, shall conduct bi-
ennial analyses in which each covered 
entity is subject to evaluation, under 
an adverse set of conditions, of wheth-
er that covered entity has the capital, 
on a total consolidated basis, nec-
essary to absorb financial losses that 
would arise under each climate change 
risk scenario developed under section 
5 of the Climate Change Financial 
Risk Act of 2019. 
‘‘(II) INITIAL
TESTS.—With re-
spect to each of the first 3 analyses 
conducted under subclause (I)— 
‘‘(aa) the covered entity to 
which such an analysis applies 
shall not be subject to any ad-
verse consequences as a result of 
the analysis; and 
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‘‘(bb) the Board of Gov-
ernors shall— 
‘‘(AA) not later than 60 
days after the date on which 
the 
Board 
of 
Governors 
completes each such anal-
ysis, make a summary of the 
analysis publicly available; 
and 
‘‘(BB) submit a copy of 
the results of the analysis to 
the Committee on Banking, 
Housing, and Urban Affairs 
of the Senate and the Com-
mittee on Financial Services 
of the House of Representa-
tives. 
‘‘(III) CLIMATE
RISK
CAPITAL 
POLICY.— 
‘‘(aa) IN GENERAL.—Except 
with respect to the first analysis 
conducted under subclause (I), 
each covered entity shall, before 
being subject to an analysis 
under that subclause, submit to 
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the Board of Governors a capital 
policy with respect to climate risk 
planning (referred to in this sub-
clause as a ‘climate risk capital 
policy’), which shall be based on 
the results of the most recently 
conducted analysis of the covered 
entity under that subclause. 
‘‘(bb) REJECTION.—Except 
as provided in subclause (II)(aa), 
the Board of Governors may ob-
ject to a climate risk capital pol-
icy submitted by a covered entity 
under item (aa) if the Board of 
Governors determines that— 
‘‘(AA) the covered enti-
ty has not demonstrated a 
reasonable plan to maintain 
capital above each minimum 
regulatory capital ratio on a 
pro forma basis under the 
adverse set of conditions de-
scribed in subclause (I); 
‘‘(BB) the climate risk 
capital policy is otherwise 
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not reasonable or appro-
priate; 
‘‘(CC) the assumptions 
and analysis underlying the 
climate risk capital policy, or 
the methodologies and prac-
tices that support the cli-
mate risk capital policy, are 
not reasonable or appro-
priate; or 
‘‘(DD) the climate risk 
capital policy otherwise con-
stitutes an unsafe or un-
sound practice. 
‘‘(cc) GENERAL
DISTRIBU-
TION LIMITATION.—If the Board 
of Governors, under item (bb), 
objects to a climate risk capital 
policy submitted by a covered en-
tity under item (aa), the covered 
entity may not make any capital 
distribution, other than a capital 
distribution 
arising 
from 
the 
issuance of a regulatory capital 
instrument eligible for inclusion 
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in the numerator of a minimum 
regulatory capital ratio.’’. 
SEC. 7. FINANCIAL STABILITY OVERSIGHT COUNCIL. 
(a) IN GENERAL.—The Financial Stability Oversight 
Council shall establish a subcommittee of the Council that 
shall support the Council in identifying risks to, and in 
responding to emerging threats to, the stability of the 
United States financial system as a result of climate 
change. 
(b) RESPONSIBILITIES.— 
(1) SUBCOMMITTEE.—The subcommittee estab-
lished under subsection (a) shall, not later than 1 
year after the completion of the first analysis re-
quired under subparagraph (C) of section 165(i)(1) 
of the Financial Stability Act of 2010 (12 U.S.C. 
5365(i)(1)), as added by section 6 of this Act, and 
in consultation with the Office of Financial Re-
search, submit to Congress an assessment of the risk 
posed by climate change to the efficiency, competi-
tiveness, and stability of the United States financial 
system as a whole. 
(2) COUNCIL.—For each year after the year in 
which the assessment required under paragraph (1) 
is submitted, the Financial Stability Oversight Coun-
cil shall include in the annual report required under 
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section 112(a)(2)(N) of the Financial Stability Act 
of 2010 (12 U.S.C. 5322(a)(2)(N)) an update to 
that assessment. 
(c) COMPOSITION.—The subcommittee established 
under subsection (a) shall be composed of— 
(1) the Chairman of the Board of Governors of 
the Federal Reserve System; 
(2) the Secretary of the Treasury; 
(3) the Comptroller of the Currency; 
(4) the Chairperson of the Board of Directors 
of the Federal Deposit Insurance Corporation; 
(5) the Chairman of the Securities and Ex-
change Commission; 
(6) the Chairperson of the Commodity Futures 
Trading Commission; and 
(7) any other voting or nonvoting members that 
the Financial Stability Oversight Council determines 
to be appropriate. 
Æ 
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