PRA sets deadline for firms to embed climate-related financial risk management

Written by Adam Cadle

02/07/2020

PRA-regulated firms should have fully embedded their approaches to managing climate-related financial risks by the end of 2021, deputy governor for prudential regulation and CEO of the PRA Sam Woods has said.

In a letter addressed to chief executive officers of all PRA-regulated firms, Woods said: “Recognising the novel nature and challenges presented by climate-related financial risks, we asked firms to have an implementation plan in place by October 2019 but did not set a date for full implementation. In light of observed progress in the analysis and management of climate-related financial risks across the financial sector, we are now clarifying our expectations on timing.

“This means that by the end of 2021, your firm should be able to demonstrate that the expectations set out in SS3/19 have been implemented and embedded throughout your organisation as fully as possible. In doing this, you should continue to take a proportionate approach that reflects your institution’s exposure to climate-related financial risk and the complexity of its operations.”

Earlier this week the Climate Financial Risk Forum (CFRF), which is co-chaired by the PRA and FCA, produced a guide written for industry by industry on how to approach climate disclosure, risk management, scenario analysis and innovation.

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