PRA Clarifies Climate Disclosure
In light of a recent consultation, the UK’s Prudential Regulation Authority (PRA) have issued an updated supervisory statement clarifying climate-related disclosure requirements.
Responses to the PRA’s consultation paper, Enhancing Banks’ and Insurers’ Approaches to Managing the Financial Risks from Climate Change, encouraged the PRA to move more quickly on climate issues, suggesting that too few firms are considering how current actions will affect future financial risks from climate change.
In response, the PRA have issued a supervisory statement outlining changes. These include providing more clarity on the timescales appropriate for scenario analysis; clarifying and updating the wording of disclosure expectations and clarifying that financial positions related to climate vulnerable assets cannot always be hedged. Clarifying disclosure requirements should lead to better quality, more comparable data which will be more effective for analysis.
In line with the changes, the PRA expect firms to submit an updated initial plan and senior management function form by 15 October 2019. More detailed expectations will be published in the future – and the results of the recently established Climate Financial Risk Forum (CFRF) are likely to further influence supervisory policy in this area.
See here for more information.