Climate Change Financial Risk Act of 2021

The Climate Change Financial Risk Act of 2021 would require the Federal Reserve to conduct regular "stress tests" on large financial institutions to determine their ability to withstand economic shocks caused by climate change. These biennial reviews would evaluate whether major banks and nonbank financial companies have enough capital to remain stable during various climate-related scenarios, such as extreme weather events or sudden shifts in energy markets. By identifying these vulnerabilities, the bill aims to protect the broader U.S. economy and individual consumers from systemic financial collapses or market disruptions linked to environmental risks.