Climate Change Financial Risk Act of 2025

Enhanced Financial Stability: The bill requires the Board of Governors to conduct biennial analyses to ensure "covered entities" have enough capital to absorb financial losses caused by climate change scenarios (Section 6). This aims to promote the "safety and soundness" of the financial system (Section 2, Paragraph 10).

Technical Assistance for Entities: The Technical Development Group is tasked with providing technical assistance to covered entities to help them assess physical or transition risks (Section 4, Paragraph c, Clause 4).

Public Information Access: The Technical Development Group must make its final work product and information used in its development publicly available (Section 4, Paragraph c, Clause 3). Furthermore, the Board of Governors must release summaries of its analyses and survey results to the public (Section 6 and Section 7).

Support for Non-Covered Entities: The Technical Development Group is required to provide publicly available resources to help entities that are not "covered entities" assess their physical and transition risks (Section 4, Paragraph c, Clause 5).

Increased Regulatory Burdens for Large Financial Companies: "Covered entities"—which include nonbank financial companies or bank holding companies with at least $250 billion in assets, or certain others with $100 billion—must undergo biennial analyses and submit "climate risk resolution plans" (Section 3 and Section 6).

Restrictions on Capital Distribution: If the Board of Governors objects to a company's climate risk resolution plan, that company may be prohibited from making capital distributions, except for specific regulatory capital instruments (Section 6, Paragraph ii, Clause dd).

Potential for Plan Rejection: The Board of Governors has the authority to reject a climate risk resolution plan if it determines the plan is not reasonable, lacks appropriate assumptions, or constitutes an unsafe practice (Section 6, Paragraph ii, Clause cc).