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Fossil Free Finance Act of 2023
12/13/2023, 5:15 AM
Summary of Bill S 1138
Under the Fossil Free Finance Act, financial institutions such as banks, investment firms, and insurance companies would be required to report their exposure to fossil fuel assets and develop plans to divest from these investments over a specified period of time. The goal of the bill is to shift investments towards clean energy and other sustainable industries in order to combat climate change and reduce greenhouse gas emissions.
Additionally, the Fossil Free Finance Act includes provisions to support the transition to a low-carbon economy, such as providing incentives for renewable energy projects and promoting green financing options. The bill also aims to increase transparency and accountability in the financial sector by requiring regular reporting on environmental, social, and governance (ESG) factors. Overall, the Fossil Free Finance Act of 2023 represents a significant step towards aligning financial practices with environmental goals and promoting sustainable economic growth. It is currently being debated in Congress and has garnered support from environmental advocates and some lawmakers who see it as a crucial tool in the fight against climate change.
Congressional Summary of S 1138
Fossil Free Finance Act of 2023
This bill requires large bank holding companies to set forth plans to reduce and ultimately eliminate the financing of activities that contribute to greenhouse gas emissions and deforestation. Specifically, the bill prohibits the financing of (1) new or expanded fossil fuel projects 60 days after enactment, (2) thermal coal by 2025, and (3) all fossil fuel projects by 2030.
Further, the Financial Stability Oversight Council must consider the activities of certain bank holding companies and nonbank financial companies that contribute to emissions as part of the prudential supervision process.
The Board of Governors of the Federal Reserve System must report on financed emissions in the financial system, the estimated emissions to meet science-based emissions targets, and recommendations for addressing regulatory gaps in reducing such emissions that cannot be addressed by the board.
