S. 3711

119 S3711 IS: Addressing Climate Financial Risk Act of 2026
 U.S. Senate
 2026-01-28
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 II  119th CONGRESS  2d Session  S. 3711  IN THE SENATE OF THE UNITED STATES   January 28, 2026   Ms. Smith  (for herself,  Mr. Merkley ,  Ms. Warren ,  Mr. Heinrich ,  Mr. Van Hollen , and  Mr. Padilla ) introduced the following bill; which was read twice and referred to the  Committee on Banking, Housing, and Urban Affairs    A BILL
To establish the Climate Financial Risk Committee and Climate Financial Risk Advisory Committee on the Financial Stability Oversight Council.
1.
Short title
This Act may be cited as the   Addressing Climate Financial Risk Act of 2026  .
2.
Financial Stability Oversight Council committees on climate financial risk
(a)
In general
Subtitle A of the Financial Stability Act of 2010 ( 12 U.S.C. 5321 et seq. ) is amended by inserting after section 121 ( 12 U.S.C. 5331 ) the following:
121A.
Climate Financial Risk Committee
(a)
Establishment
There is established in the Council the Climate Financial Risk Committee, which shall—
(1)
support the Council in identifying priority areas for assessing and mitigating climate-related risks to the financial system;
(2)
serve as a coordinating body to share information, facilitate the development of common approaches and standards, and facilitate communication across Council member agencies;
(3)
collaborate with the Office of Financial Research to compile climate and financial data from public sources and from member agencies of the Council, provide analytical tools and software, and otherwise assist member agencies of the Council in jointly analyzing potential financial stability risks; and
(4)
provide updates to the Council on the status of the efforts of the Council and its member agencies to identify and address climate financial risk, including related to—
(A)
incorporating climate financial risk into regulatory and supervisory programs;
(B)
improving data and methodologies;
(C)
enhancing climate-related disclosures; and
(D)
assessing climate-related risks to the financial stability of the United States.
(b)
Membership
The Climate Financial Risk Committee shall consist of staff representatives from each of the member agencies of the Council and shall be led by the Deputy Assistant Secretary of the Council.
(c)
Restriction on termination
The Climate Financial Risk Committee may not be terminated or modified except pursuant to an Act of Congress.
121B.
Advisory Committee on Climate Risk
(a)
Establishment
There is established in the Council the Advisory Committee on Climate Risk, which shall—
(1)
consult and assist the Council with gathering information on, conducting analysis of, and making recommendations to identify, assess, and mitigate climate-related risks to the financial system, and other duties that the Climate Financial Risk Committee or the Council may assign; and
(2)
meet with the Council on a bimonthly basis.
(b)
Membership
The Advisory Committee shall consist of not more than 30 members as follows:
(1)
Eight members who are climate science experts with a demonstrated record of peer-reviewed publications and professional contributions to climate modeling, climate financial risk assessment, or related areas, of whom—
(A)
2 shall be appointed by the Secretary of Energy;
(B)
2 shall be appointed by the Administrator of the Environmental Protection Agency; and
(C)
4 shall be appointed by the Director of the National Science Foundation.
(2)
Eight members, to be appointed by the Council, who are experts in climate economics or climate financial risk, of whom not fewer than 1 member is an expert in one of the following areas:
(A)
Insurance.
(B)
Capital markets.
(C)
Banking.
(D)
International financial markets.
(E)
Housing finance.
(F)
The perspective of asset owners.
(3)
Two members from nongovernmental research institutions that offer expertise in environmental or clean energy policy, appointed by the Council.
(4)
Two members from consumer advocacy or labor union groups, appointed by the Director.
(5)
Four members from investor networks or shareholder advocacy groups, appointed by the Chairman of the Securities and Exchange Commission.
(6)
Relevant stakeholders from the financial services industry, commercial businesses, or other organizations, which shall not include any stakeholders from the oil or gas industry.
(c)
Term
The members of the Advisory Committee shall be appointed for 3-year terms, except that the initial terms of the first members of the Advisory Committee shall be staggered so that—
(1)
8 members serve terms of 3 years;
(2)
8 members serve terms of 2 years; and
(3)
8 members serve terms of 1 year.
(d)
Restrictions on Removal
A member of the Advisory Committee may not be removed before the date on which the term of the member expires unless  2/3  of the heads of the member agencies of the Council vote in favor of such removal.
(e)
Consultation
The Council shall consult with the Advisory Committee in carrying out the requirements of this section.
(f)
Member agencies
Each member agency should develop and make publicly available a strategy to identify and mitigate climate financial risk within the jurisdiction of the member agency.
(g)
Coordination
The Council shall—
(1)
facilitate the sharing of best practices on addressing climate financial risk across agencies with members serving on the Advisory Committee; and
(2)
assign the Office of Financial Research to conduct ongoing research into climate financial risk.
(h)
Inclusion in annual report
The Council shall include a section on climate financial risk in—
(1)
the annual report of the Council to Congress; and
(2)
if relevant, in any other report to Congress.
121C.
Report on climate financial risk
Not later than 270 days after the date of enactment of this section, and annually thereafter, the Council shall, in coordination with the Advisory Committee on Climate Risk established under section 121B and the Advisory Committee on Climate Risk established under section 121A, publish a report that—
(1)
assesses—
(A)
the potential impact of climate-related risks on the financial stability of the United States;
(B)
the extent to which Federal and State financial regulatory agencies have sufficient expertise on climate financial risk;
(C)
the quality of data available to Council members to properly assess climate financial risk and any gaps in data that exist;
(D)
the extent to which property and casualty insurance availability and affordability trends are affecting credit markets, housing finance, and financial stability;
(E)
the extent to which nonbank financial companies and large, interconnected bank holding companies supervised by the Board of Governors are engaging in safe and sound management of climate financial risks;
(F)
the degree of coordination among Federal and State financial regulatory agencies on climate financial risk;
(G)
the degree of coordination by Federal and State financial regulatory agencies with international financial regulatory authorities on climate financial risk;
(H)
how climate-related disclosure requirements in the United States compare to similar disclosure regimes in other countries; and
(I)
any other areas the Council determines important; and
(2)
provides recommendations based on the assessments conducted under paragraph (1) to Federal and State financial regulatory agencies and to Congress on how to improve the ability of the financial regulatory system in the United States to identify and mitigate both the short- and long-term financial risks associated with climate change.
 .
(b)
Technical and conforming amendment
The table of contents of the Dodd-Frank Wall Street Reform and Consumer Protection Act in section 1(b) of that Act is amended by inserting after the item relating to section 121 the following:
Sec. 121A. Climate Financial Risk Committee.
Sec. 121B. Advisory Committee on Climate Risk.
Sec. 121C. Report on climate financial risk.
  .
3.
Update on supervisory guidance on climate financial risk
(a)
Definition
In this section, the term  Federal banking agency  has the meaning given the term in section 2 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ( 12 U.S.C. 5301 ).
(b)
Update
Each Federal banking agency and the National Credit Union Administration shall update applicable supervisory guidance to include climate financial risk, including credit, liquidity, market, operational, and reputational risk to ensure that each institution supervised by the Federal banking agency or the National Credit Union Administration, as applicable, with greater than $50,000,000,000 in assets appropriately identify and mitigate climate financial risk.
(c)
Coordination
The Financial Institutions Examination Council shall ensure that the guidance updated under subsection (b) is—
(1)
appropriately coordinated among the Federal banking agencies and the National Credit Union Administration; and
(2)
shared with State regulators.
4.
Update nonbank SIFI designation guidance
The Financial Stability Oversight Council shall update subpart B of part 1310 of title 12, Code of Federal Regulations, to specify how the Council will incorporate climate financial risk into determinations described in that subpart.
5.
Federal Insurance Office report on insurance regulation and climate financial risk
Not later than 1 year after the date of enactment of this Act, the Federal Insurance Office shall publish a report, which may be submitted along with the report described in section 6, that—
(1)
assesses the potential impact of climate financial risk on the insurance sector in the United States;
(2)
provides an update on the implementation of recommendations made by the 2023 report of the Federal Insurance Office titled  Insurance Supervision and Regulation of Climate-Related Risks ; and
(3)
recommends ways to modernize and improve regulation and supervision of climate financial risk by the insurance sector in the United States.
6.
Federal Insurance Office data collection on climate-related risks
(a)
In general
Not later than 1 year after the date of the enactment of this Act, the Federal Insurance Office, in consultation with the National Association of Insurance Commissioners and State insurance commissioners, shall publish a report on the homeowners insurance underwriting data described in subsection (b) for calendar years 2023 and 2024 to assess climate-related risks across State insurance markets and how such risks could impact the financial stability of the United States.
(b)
Data described
The data described in this subsection—
(1)
shall be disaggregated by zip code;
(2)
shall include granular data on premiums, policies, claims, losses, limits, deductibles, non-renewals, and cancellations, consistent with the information requested under the  Federal Insurance Office Climate-Related Financial Risk Data Collection for U.S. Homeowners Multi-Peril Underwriting Data  (88 Fed. Reg. 75380), as modified by the most recent National Association of Insurance Commissioners Property & Casualty Insurance Market Intelligence Data Call; and
(3)
shall be collected directly by the Federal Insurance Office from insurance companies, across all lines of business of such insurance company, pursuant to section 313 of title 31, United States Code.
(c)
Dissemination
Upon request, the Federal Insurance Office shall provide to the Committee on Banking, Housing, and Urban Affairs of the Senate, the Committee on Financial Services of the House of Representatives, or the State insurance commissioner with regulatory authority over an insurance company the report required under subsection (a), including the data described in subsection (b).
(d)
Form
The Federal Insurance Office shall ensure that the report required under subsection (a) does not include any personally identifiable information.
(e)
Subsequent reports
Not later than July 1, 2026, and annually thereafter, in accordance with the requirements of this section, the Federal Insurance Office shall make publicly available a report on the homeowners insurance underwriting data described in subsection (b) for the calendar year preceding the date of the report.
7.
Sense of Congress relating to improving global coordination
It is the sense of Congress that relevant Federal financial regulatory agencies and the Department of the Treasury, including the Federal Insurance Office, as applicable, should—
(1)
join the Network for Greening the Financial System and other international organizations focused on climate financial risk;
(2)
formally join the Task Force on Climate-Related Financial Risks of the Basel Committee on Banking Supervision; and
(3)
work with international regulators on climate financial risk whenever possible, consistent with United States law.