Climate Financial Risk Forum

  • 13 August 2019
  • Blog | Regulation & Compliance | Green Finance | Blog

Industry and regulators join forces on climate financial risk

Practical guidance for firms responding to financial risks from climate change is being developed by the UK’s new Climate Financial Risk Forum.

The Forum was set up in March by the Bank of England’s Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) to advance financial sector responses to the financial risks from climate change. The aim is to build capacity and share best practice across financial regulators and industry, including banks, insurers, and asset managers.

“The Climate Financial Risk Forum will seek to encourage approaches in the financial sector, managing the financial risks from climate change as well as supporting innovation in green finance,” said FCA Chief Executive, Andrew Bailey.

Sam Woods, Deputy Governor and CEO of the PRA added: “Climate change has the potential to create significant financial risks for the firms the PRA regulates. The challenge we face in mitigating these risks is unprecedented, and we need to begin to act now if we are to ensure an orderly transition to a low-carbon economy.

“The establishment of the Climate Financial Risk Forum will provide a platform through which the PRA, FCA and industry can share experience and build expertise as we begin this work.”

At its first meeting, the forum decided to set up four working groups to focus on risk management, scenario analysis, disclosure, and innovation. Each working group will be chaired by a member of the forum and will meet more frequently than the Climate Financial Risk Forum, reporting back at each Forum meeting. The aim is to produce practical guidance on each of the four focus areas. The final outputs will be shared with industry more widely.

Membership of the working groups will be wider than the forum to allow them to draw on expertise as necessary, such as from academia and industry.

The 17 current members of the Climate Financial Risk Forum are:

Banks: BNP Paribas; HSBC; JP Morgan; RBS; Yorkshire Building Society

Insurers: Aviva; Legal & General; Lloyd’s of London; RSA Insurance Group; Zurich

Asset Managers: Blackrock; Hermes; Invesco; Schroders; Standard Life Aberdeen

Others: Greening Finance Initiative; London Stock Exchange Group

The Chartered Banker Institute welcomes the opportunity to share its thinking and the findings of any research it conducts in this area with the PRA, the Forum and its workstreams.


Green Finance Certificate

The Chartered Banker Institute’s Green Finance Certificate™, launched in 2018, is the world’s first benchmark qualification for Green Finance. This encourages financial services professionals to enhance their knowledge of Green Finance; develops the pool of Green Finance professionals; and helps position the UK as the global hub for Green Finance.