The Prudential Regulation Authority has published a consultation paper on a draft Supervisory Statement on managing the financial risks from climate change. The consultation follows the PRA's publication in September 2018 of its report "Transition in thinking: The impact of climate change on the U.K. banking sector." The consultation paper is relevant to banks, insurers, re-insurers, building societies and PRA-designated investment firms. The PRA wants firms to take a strategic approach to financial risks from climate change by taking into account current and credible risks and identifying actions needed now to mitigate existing and future risks.
The draft Supervisory Statement states that the PRA expects a firm's response to the financial risks from climate change to be proportionate to the nature, scale and complexity of its business. The draft Supervisory Statement sets out the PRA's expectations on how firms:
The PRA and the Financial Conduct Authority will establish a Climate Financial Risk Forum by the end of November 2018. The Forum will comprise representatives from industry, technical experts and other stakeholders and will aim to encourage financial sector approaches to managing the financial risks from climate change as well as support green finance.
The FCA has published a Discussion Paper on climate change and green finance, asking for views on potential changes to its regulatory approach to these issues and setting out specific action that the FCA intends to take in the short term in four focus areas - capital markets disclosures, public reporting requirements, green finance and pensions.
The PRA's consultation closes on January 15, 2019.
View the PRA's consultation paper.
View details of the FCA's Discussion Paper.
View details of the PRA's report on climate change and the U.K. banking sector.