The Prudential Regulation Authority (PRA) and FCA have held the first Climate Financial Risk Forum (CFRF), which aims to improve responses to the financial risks from climate change.
Outlined in the first meeting were the four working groups to focus on risk management, scenario analysis, disclosure, and innovation. Each of these groups will be chaired by a member of the forum and meet more frequently than other CFRF members.
The goal is to establish practical guidance on each area and distribute these in the industry.
It was attended by senior representatives from across the financial sector including banks, insurers, and asset managers and will be hosted three times a year. The meeting will also include observers from trade bodies to represent a broad range of opinions and ensure developments in the forum are relayed to their members.
PRA executive director of international banks supervision Sarah Breeden and FCA executive director of strategy and competition Christopher Woolard chaired the meeting.
The change in climate and how society responds presents financial risks which overlap with objectives of the FCA and PRA, it said. These may not mature until further in the future, but firms are looking to enhance their approach to manage these risks.
Currently, there are barriers to implement these forward-looking, strategic approaches and the CFRF forum will reduce these obstacles by building practical tools and approaches to address the climate-associated risks.
FCA chief executive Andrew Bailey said, “The first forum meeting today was an important step in tackling a major threat to the future stability of the financial system. The FCA and PRA have been working closely together, combining and building on our joint knowledge, to develop an approach which will enhance the UK financial system’s resilience to climate change.
“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.”
Participants of the forum included, BNP Paribas, Aviva, Blackrock, Green Finance Institute, HSBC, Legal & General, Hermes, London Stock Exchange Group, JP Morgan, Lloyd’s of London, Invesco, RBS, RSA Insurance Group, Schroders , Yorkshire Building Society, Zurich and Standard Life Aberdeen.
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Copyright © 2018 RegTech Analyst
