HouseH.R. 10746119th Congress
Fossil Free Finance Act of 2026
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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10746 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 10746
To amend the Bank Holding Company Act of 1956 and the Financial
Stability Act of 2010 to require a reduction of financial sector
emissions to protect financial stability, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 5, 2026
Ms. Pressley (for herself and Ms. Tlaib) introduced the following bill;
which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Bank Holding Company Act of 1956 and the Financial
Stability Act of 2010 to require a reduction of financial sector
emissions to protect financial stability, and for other purposes.
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 ``Fossil Free Finance Act of 2026''.
SEC. 2. ALIGNMENT OF FINANCIAL SECTOR EMISSIONS WITH SCIENCE-BASED
TARGETS.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by adding at the end the following:
``SEC. 15. ALIGNMENT OF FINANCIAL SECTOR EMISSIONS WITH SCIENCE-BASED
TARGETS.
``(a) Definitions.--In this section:
``(1) Carbon offsets.--The term `carbon offsets' means an
emissions reduction or removal of greenhouse gases in a manner
calculated and traced for the purpose of offsetting an entity's
greenhouse gas emissions.
``(2) Covered bank holding company.--The term `covered bank
holding company' means a bank holding company with total
consolidated assets not less than $50,000,000,000.
``(3) Deforestation risk commodities.--The term
`deforestation risk commodities' means globally traded goods
and raw materials--
``(A) that originate from natural forest
ecosystems--
``(i) directly from within forest areas; or
``(ii) from areas previously under forest
cover; and
``(B) the extraction or production of which
contributes significantly to the conversion of natural
forest to agriculture, tree plantation, or other
nonforest land use.
``(4) Financial sector emissions.--The term `financial
sector emissions' means, with respect to a covered bank holding
company, and any nonbank financial company supervised by the
Board in accordance with section 113 of the Financial Stability
Act of 2010 (12 U.S.C. 5323), the greenhouse gas emissions of
such company, expressed in metric tons of carbon dioxide
equivalent, attributable to investment in, or the providing of
financial services to, another company or project of another
company, including the following:
``(A) Financed emissions.--Emissions from financing
activities, including--
``(i) on-balance sheet listed and unlisted
corporate bonds and on-balance sheet listed
equity that are traded on a market and are for
general corporate purposes;
``(ii) business loans and equity
investments in private companies;
``(iii) project finance and investment such
as on-balance sheet loans or equities to
projects or activities that are designated for
specific purposes;
``(iv) securitized and structured products
that are backed by identifiable loans, leases,
or other income-generating assets;
``(v) sovereign bonds and loans issued in
domestic or foreign currencies; and
``(vi) sub-sovereign bonds and loans issued
by public authorities below the national level
such as states, provinces, regions, cities, or
municipalities, in either domestic or foreign
currency.
``(B) Facilitated emissions.--Emissions from
facilitating activities, including the following:
``(i) Facilitated new issuance of public
debt, including all types of bonds issued for
general purposes.
``(ii) Facilitated new issuance of public
equity, including common stock (such as initial
public offerings and follow-on issuances) and
preferred shares.
``(iii) Facilitated equity investments in
private companies (including private
placements).
``(iv) Facilitated debt investments in
private companies (including private credit).
``(v) A loan made available by 2 or more
providers under a common loan agreement.
``(5) Fossil fuel facilitation.--The term `fossil fuel
facilitation' means, with respect to a covered bank holding
company, facilitating the investment in--
``(A) a company that derives not less than 15
percent revenue from exploration, extraction,
processing, exporting, transporting, and any other
significant action with respect to oil, natural gas,
coal, or any byproduct thereof; or
``(B) a fossil fuel project.
``(6) Fossil fuel financing.--The term `fossil fuel
financing' means, with respect to a covered bank holding
company, investment in--
``(A) a company that derives not less than 15
percent revenue from exploration, extraction,
processing, exporting, transporting, and any other
significant action with respect to oil, natural gas,
coal, or any byproduct thereof; or
``(B) a fossil fuel project.
``(7) Fossil fuel project.--The term `fossil fuel project'
means a project intended to--
``(A) facilitate or expand exploration, extraction,
processing, exporting, transporting, or any other
significant action with respect to oil, natural gas,
coal; or
``(B) construct any infrastructure related to the
activities described in subparagraph (A), such as
wells, pipelines, terminals, refineries, or utility-
sale generation facilities.
``(8) Greenhouse gas.--The term `greenhouse gas' means
carbon dioxide, methane, nitrous oxide, nitrogen trifluoride,
hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.
``(9) Natural forest.--The term `natural forest' means a
natural arboreal ecosystem that--
``(A) has a species composition a significant
percentage of which is native species; and
``(B) contains a tree canopy cover of more than 10
percent over an area of not less than 0.5 hectares.
``(10) New or expanded fossil fuel project.--The term `new
or expanded fossil fuel project' means a fossil fuel project
that would increase the--
``(A) level of proven or developable oil, natural
gas, or coal reserves;
``(B) midstream throughput of pipelines, terminals,
or refineries; or
``(C) combustion of oil, natural gas, or coal for
utility-scale electricity generation.
``(b) Requirements.--Not later than 210 days after the date of
enactment of this section, and not less than once every 2 years
thereafter, a covered bank holding company shall--
``(1) submit to the Board an emission reduction plan for
reducing emissions in accordance with this section; and
``(2) if the plan is accepted under subsection (d),
implement such plan.
``(c) Elements of Plan.--Each plan required under subsection
(b)(1)--
``(1) shall include--
``(A) a selection of an emissions baseline year
that is not later than 2 years after the date of
enactment of this section;
``(B) a plan for the covered bank holding company
to reach zero financial sector emissions not later than
January 1, 2050;
``(C) a plan to reduce the financial sector
emissions of the bank holding company by 50 percent
below the emissions baseline year not later than
January 1, 2035;
``(D) a plan to discontinue new or expanded fossil
fuel projects not later than 60 days after the date of
enactment of this section;
``(E) a plan for the covered bank holding company
to immediately discontinue thermal coal financing and
facilitation;
``(F) a plan for the covered bank holding company
to discontinue all fossil fuel financing and
facilitation not later than January 1, 2035;
``(G) a plan for the covered bank holding company
to eliminate financing and facilitation of
deforestation risk commodities; and
``(H) such other requirements as the Board
determines is necessary to protect the financial
stability of the United States;
``(2) may not include carbon offsets;
``(3) may include proven negative carbon emission
technologies to meet the requirements under paragraph (1)(A) if
the technologies do not negatively impact low-income, minority,
or indigenous communities;
``(4) shall prioritize--
``(A) the covered bank holding company withdrawing
funding from companies and projects that have a
disproportionately negative impact on the health and
well-being of low-income and minority communities;
``(B) lending to companies for purposes of carrying
out severance, retraining, and other benefits to
workers impacted by the transition to zero financial
sector emissions; and
``(C) enhanced due diligence about the impacts of
financing on biodiversity and community and the
framework of the client for and track record in--
``(i) managing greenhouse gas and other
emissions; and
``(ii) compliance with regulations and
international standards.
``(d) Consideration of Plan.--Not later than 180 days after the
date on which the Board receives a plan submitted under subsection
(b)(1), the Board shall--
``(1) accept the plan; or
``(2)(A) reject the plan if the plan does not align with
science-based targets without the use of offsets or unproven
carbon emission reduction technologies; and
``(B) require the covered bank holding company to
revise such plan in accordance with the suggestions of
the Board.
``(e) Penalties.--If a covered bank holding company does not submit
a plan in accordance with this section or meet the requirements set out
in such a plan--
``(1) the Board shall--
``(A) apply the penalties under section 8 under
regulations prescribed by the Board;
``(B) require divestiture of assets in order to
bring the financial sector emissions of a covered bank
holding company into compliance with the requirements
set out in such a plan; and
``(C) notify the Board of Directors of the Federal
Deposit Insurance Corporation of the noncompliance of
the covered bank holding company; and
``(2) the Board of Directors of the Federal Deposit
Insurance Corporation may, with respect to any covered bank
holding company described in paragraph (1)(C) or a subsidiary
of the bank holding company that contributes to the failure of
the covered bank holding company to comply with this section--
``(A) terminate the insured status of the insured
depository institution of which the bank holding
company has control under section 8(a)(2) of the
Federal Deposit Insurance Act (12 U.S.C. 1818(a)(2));
and
``(B) carry out any other corrective action
available under section 38 of the Federal Deposit
Insurance Act (12 U.S.C. 1831o) for the insured
depository institution of which the bank holding
company has control under section 8(a)(2) of the
Federal Deposit Insurance Act (12 U.S.C. 1818(a)(2)).
``(f) Regulations.--Not later than 180 days after the date of
enactment of this section, the Board shall issue regulations
establishing the format and timing for submission of the plans required
under this section.''.
SEC. 3. CONTRIBUTION TO CLIMATE CHANGE INCLUDED IN FSOC DESIGNATION.
(a) Authority To Require Supervision and Regulation of Certain
Nonbank Financial Companies.--Section 113 of the Financial Stability
Act of 2010 (12 U.S.C. 5323) is amended--
(1) in subsection (a)(2)--
(A) in subparagraph (J), by striking ``and'' at the
end;
(B) by redesignating subparagraph (K) as
subparagraph (L); and
(C) by inserting after subparagraph (J) the
following:
``(K) the extent to which the company makes a
nontrivial contribution to the financial sector
emissions, as defined in section 15 of the Bank Holding
Company Act of 1956, of the financial system of the
United States; and''; and
(2) in subsection (b)(2)--
(A) in subparagraph (J), by striking ``and'' at the
end;
(B) by redesignating subparagraph (K) as
subparagraph (L); and
(C) by inserting after subparagraph (J) the
following:
``(K) the extent to which the company makes a
nontrivial contribution to the financial sector
emissions, as defined in section 15 of the Bank Holding
Company Act of 1956, of the financial system of the
United States; and''.
(b) Enhanced Supervision and Prudential Standards for Nonbank
Financial Companies Supervised by the Board of Governors and Certain
Bank Holding Companies.--
(1) Development of prudential standards.--Section 115(b)(1)
of the Financial Stability Act of 2010 (12 U.S.C. 5325(b)(1))
is amended--
(A) in subparagraph (H), by striking ``and'';
(B) in subparagraph (I), by striking the period at
the end and inserting ``; and''; and
(C) by adding at the end the following:
``(J) divestiture of financial sector emissions, as
defined in section 15 of the Bank Holding Company Act
of 1956.''.
(2) Required standards.--Section 165(b)(1)(A) of the
Financial Stability Act of 2010 (12 U.S.C. 5365(b)(1)(A)) is
amended--
(A) in clause (iv), by striking ``and'' at the end;
(B) in clause (v), by striking the period and
inserting ``; and''; and
(C) by adding at the end the following:
``(vi) emissions reduction plans in
accordance with section 15 of the Bank Holding
Company Act of 1956.''.
SEC. 4. REPORTS.
(a) Definitions.--In this section:
(1) Covered bank holding company; financial sector
emissions.--The terms ``covered bank holding company'' and
``financial sector emissions'' have the meanings given the
terms in section 15 of the Bank Holding Company Act of 1956, as
added by section 2 of this Act.
(2) Science-based emissions targets.--The term ``science-
based emissions targets'' means reduction in greenhouse gas
emissions consistent with preventing an increase in global
average temperature of not less than 1.5 degrees Celsius
compared to pre-industrial levels.
(b) Initial Report.--Not later than 180 days after the date of
enactment of this Act, the Board of Governors of the Federal Reserve
System shall submit to Congress a report that--
(1) identifies the current level of financial sector
emissions in the financial system of the United States;
(2) includes an analysis of trends in financial sector
emissions reductions;
(3) includes a summary of the commitments of covered bank
holding companies to reduce financial sector emissions;
(4) estimates the financial sector emissions in the
financial system of the United States needed to meet science-
based emissions targets;
(5) identifies regulatory gaps in reducing financial sector
emissions that cannot be addressed with authorities of the
Board and recommendations for addressing such gaps;
(6) identifies data quality challenges for assessing
financial sector emissions and recommendations to address those
challenges;
(7) identifies the equitable transition needs for workers
and communities that will be impacted by a shift to a zero
financial sector emissions economy;
(8) analyzes--
(A) the number and groups of people affected by a
transition to zero financial sector emissions; and
(B) the economic impact of such a transition with
respect to such groups; and
(9) identifies regulatory and legislative options for
mitigating the economic impacts described in paragraph (8)(B),
including--
(A) the use of existing authorities, including the
Community Reinvestment Act of 1977 (12 U.S.C. 2901 et
seq.) and emergency lending powers under section 13 of
the Federal Reserve Act (12 U.S.C. 342); and
(B) the establishment of a public investment bank
to finance investment in an equitable transition to a
zero financial sector emissions economy.
(c) Periodic Report.--Not later than 180 days after the date of
enactment of this Act, and not less than once every 2 years thereafter,
the Board of Governors of the Federal Reserve System shall submit to
Congress a report that includes--
(1) an analysis of the progress against aligning with
financial sector emissions targets;
(2) the estimates described in subsection (b)(4);
(3) an analysis of the progress made in the preceding 2
years toward an equitable transition to a zero financial sector
emissions economy; and
(4) recommendations with respect to assistance Congress and
Federal agencies may provide to--
(A) facilitate a reduction of financial sector
emissions; and
(B) support an equitable transition to a zero
financial sector emissions economy.
(d) Collection of Data.--The Board of Governors of the Federal
Reserve System shall collect such data as needed from bank holding
companies to carry out the reports required under this section.
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