clyde & co – Banks and insurers have more work to do on climate risk: The Bank of England publishes the results of its Climate Biennial Exploratory Scenario

Since 2015, the Bank of England has been part of a global regulatory movement spearheaded by the Financial Stability Board seeking to address the “tragedy of the horizon” of climate change related financial risks. The Bank’s expectations were set out in its Supervisory Statement 3/19 and a Dear CEO letter dated 1 July 2020. The Bank expects regulated firms to:

- embed climate risks in business-as-usual risk management
- engage counterparties to understand their vulnerability to climate change
- encourage boards to take a strategic, long‑term approach to managing these risks