Development and updating of climate change risk scenarios

(a) In general (1) Initial development Not later than 1 year after the date of enactment of this Act, the Board of Governors, in coordination with the climate science leads, and taking into consideration the recommendations of the Technical Development Group, shall develop 3 separate climate change risk scenarios as follows: (A) One scenario that assumes an average increase in global temperatures of 1.5 degrees Celsius above pre-industrial levels. (B) One scenario that assumes an average increase in global temperatures of 2 degrees Celsius above pre-industrial levels. (C) One scenario that— (i) assumes the likely and very likely average increase in global temperatures that can be expected, taking into consideration the extent to which national policies and actions relating to climate change have been implemented, as of the date on which the scenario is developed; and (ii) does not take into consideration commitments for national policies and actions relating to climate change that, as of the date described in clause (i), have not been implemented. (2) International coordination In developing and updating the 3 scenarios required under this subsection, the Board of Governors shall take into consideration analytical tools and best practices developed by international banking supervisors relating to climate risks and scenario analysis in an effort to develop consistent and comparable data-driven scenarios. (3) Recommendations If the Technical Development Group determines that the average increase in global temperatures described in subparagraph (A) or (B) of paragraph (1) is no longer scientifically valid, the Technical Development Group may recommend that the Board of Governors, in coordination with the climate science leads, update the average increase in global temperatures described in the applicable subparagraph to reflect the most current assessment of climate change science. (b) Considerations In developing and updating each of the 3 scenarios required under subsection (a), the Board of Governors, in coordination with the climate science leads, shall account for physical risks and transition risks that may disrupt business operations across the global economy, including through— (1) disruptions with respect to— (A) the sourcing of materials; (B) production; (C) transportation; and (D) the disposal of products and services; (2) changes in the availability and prices of raw materials and other inputs; (3) changes in agricultural production and with respect to food security; (4) direct damages to fixed assets; (5) increases in costs associated with insured or uninsured losses; (6) changes in asset values; (7) impacts on— (A) aggregate demand for products and services; (B) labor productivity; (C) asset liquidity; and (D) credit availability; (8) mass migration and increases in disease and mortality rates; (9) international conflict, as such conflict relates to global economic activity and output; and (10) changes in any other microeconomic or macroeconomic condition that the Board of Governors, in coordination with the climate science leads, determines to be relevant.