Climate Northern Ireland Logo
Finance sector needs CC plan

Finance sector needs CC plan 17 October 2018

Banks, insurers must have credible plans for climate change: BoE (via Reuters)

By Huw Jones

Britain’s banks and insurers must come up with credible plans for protecting themselves against risks from climate change and may need to hold more capital, the Bank of England said on Monday.

“Financial risks from climate change will be minimized if there is an orderly market transition to a low–carbon world, but the window for an orderly transition is finite and closing,” the central bank said in a policy proposal document.

Governor Mark Carney, who has put climate change issues on the BoE’s regulatory radar, said last month that lenders had failed to grasp the scale of the challenge.

The BoE’s Prudential Regulation Authority said it expects firms to understand how climate risks will affect their business model.”

Insurers are facing heavier payouts for increased flooding caused by climate change and tougher energy efficiency standards for homes and commercial property could affect repayments on mortgages and thereby hit banks, it said.

If the risks are material, the PRA said firms should show how they will mitigate them “and to have a credible plan or policies in place for managing exposures.”

Read more via Reuters…