Addressing Climate Financial Risk Act of 2021
This bill establishes the Climate Risk Advisory Committee that must consult with the Financial Stability Oversight Council of the Department of the Treasury regarding a report on the impact of climate risk on U.S. financial stability.
Additionally, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration must include climate risk in the guidance provided to a supervised financial institution.
To establish the Advisory Committee on Climate Risk on the Financial 
                      Stability Oversight Council.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Addressing Climate Financial Risk 
Act of 2021''.

SEC. 2. ADVISORY COMMITTEE ON CLIMATE 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:

``SEC. 121A. ADVISORY COMMITTEE ON CLIMATE RISK.

    ``(a) Establishment.--There is established in the Council the 
Climate Risk Advisory Committee, which shall--
            ``(1) consult with the Council in the drafting by the 
        Council of an annual report on climate risk required under 
        subsection (e) and other climate risk matters; and
            ``(2) meet with the Council not less frequently than once 
        per year.
    ``(b) Membership.--
            ``(1) In general.--The Committee shall consist of the 
        following members:
                    ``(A) Four members who are climate science experts, 
                of whom--
                            ``(i) 1 shall be appointed by the Secretary 
                        of Energy;
                            ``(ii) 1 shall be appointed by the 
                        Administrator of the Environmental Protection 
                        Agency; and
                            ``(iii) 2 shall be appointed by the 
                        Director of the National Science Foundation.
                    ``(B) Eight members who are experts in climate 
                economics or climate financial risk appointed by the 
                Council, of whom not fewer than 1 member is each an 
                expert in--
                            ``(i) insurance;
                            ``(ii) capital markets;
                            ``(iii) banking;
                            ``(iv) international financial markets;
                            ``(v) housing; and
                            ``(vi) the perspective of asset owners.
            ``(2) Prohibition.--No member of the Committee may be 
        employed by a company within the jurisdiction of a member 
        agency of the Council.
    ``(c) Term.--The members of the Committee shall be appointed for 3-
year terms, except that the initial terms of the first members of the 
Committee shall be staggered so that--
            ``(1) 4 members serve terms of 3 years;
            ``(2) 4 members serve terms of 2 years; and
            ``(3) 4 members serve terms of 1 years.
    ``(d) Consultation.--The Council shall consult with the Committee 
in carrying out the requirements of this section.
    ``(e) Report on Climate Financial Risk.--Not later than 270 days 
after the date of enactment of this section, the Council shall, in 
coordination with the Committee and the Deputies Committee of the 
Council, publish a report that--
            ``(1) assesses--
                    ``(A) the potential impact of climate risk on the 
                financial stability of the United States;
                    ``(B) the extent to which Federal and State 
                financial regulatory agencies have sufficient expertise 
                on climate 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 supervised financial 
                institutions are engaging in sound climate risk 
                management;
                    ``(E) the degree of coordination among Federal and 
                State financial regulatory agencies on climate risk;
                    ``(F) the degree of coordination by Federal and 
                State financial regulatory agencies with international 
                financial regulatory authorities on climate financial 
                risk;
                    ``(G) how U.S. climate financial risk disclosure 
                requirements compare to climate financial risk 
                disclosure regimes in other countries and to other 
                regimes that are available; and
                    ``(H) any other areas the Council believes are 
                important; and
            ``(2) provides recommendations based on the assessments in 
        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 climate financial risk.
    ``(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 should--
            ``(1) facilitate the sharing of best practices on climate 
        financial risk across agencies; 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.''.
    (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. Advisory Committee on Climate Risk.''.

SEC. 3. UPDATE ON SUPERVISORY GUIDANCE ON CLIMATE 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 risk, including credit, liquidity, market, operational, 
and reputational risk to ensure that supervised financial institutions 
appropriately identify and mitigate climate financial risk.
    (c) Coordination.--The Federal 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.

SEC. 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 risk into determinations described in 
that subpart.

SEC. 5. FIO REPORT ON INSURANCE REGULATION AND CLIMATE RISK.

    Not later than 1 year after the date of enactment of this Act, the 
Federal Insurance Office shall publish a report that--
            (1) assesses the potential impact of climate financial risk 
        on the insurance sector in the United States; and
            (2) recommends ways to modernize and improve the system of 
        climate risk insurance regulation in the United States.

SEC. 6. IMPROVE GLOBAL COORDINATION.

    It is the sense of Congress that relevant Federal financial 
regulatory agencies and the Department of the Treasury, if relevant, 
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.
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Addressing Climate Financial Risk Act of 2021
To establish the Advisory Committee on Climate Risk on the Financial Stability Oversight Council.
Addressing Climate Financial Risk Act of 2021
Rep. Casten, Sean