H.R.2823 - Climate Change Financial Risk Act of 2025 (119th Congress)
Summary
H.R.2823, the Climate Change Financial Risk Act of 2025, directs the Federal Reserve to develop and conduct financial risk analyses related to climate change. It mandates the creation of climate change risk scenarios and requires financial institutions to undergo stress tests to assess their resilience to climate-related financial risks. The bill also establishes a Technical Development Group to advise the Federal Reserve on climate risk scenarios.
Expected Effects
This act will likely lead to increased regulatory scrutiny of financial institutions concerning climate-related risks. It could also drive investment towards more climate-resilient sectors and technologies. Ultimately, it aims to safeguard the financial system from potential economic shocks caused by climate change.
Potential Benefits
- Enhanced financial stability by identifying and mitigating climate-related risks.
- Increased transparency regarding the financial sector's exposure to climate change.
- Promotion of sustainable investments and a transition to a lower-carbon economy.
- Improved risk management practices within financial institutions.
- Better understanding of the economic impacts of climate change.
Potential Disadvantages
- Potential for increased regulatory burden on financial institutions.
- Possible limitations on investment in certain sectors, such as fossil fuels.
- Risk of inaccurate or biased climate risk assessments.
- Compliance costs for financial institutions, potentially passed on to consumers.
- Uncertainty regarding the long-term economic impacts of climate policies.
Constitutional Alignment
The bill's constitutional alignment stems from Congress's power to regulate commerce (Article I, Section 8) and to provide for the general welfare of the United States (Preamble). By addressing climate-related financial risks, the bill aims to protect the stability of the financial system, which is within the purview of congressional authority. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).