Bank of England preparing to unveil new climate-change guidelines for financial sector

By David Milliken and Andy Bruce

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In September the central bank said that only a small fraction of banks in Britain were planning properly to mitigate risks to their businesses from climate change and that it would push lenders to take action.

Carney said there appeared to be a “cognitive dissonance” between insurers’ careful assessment of the risks climate change posed to the liabilities they insured, and a much more superficial approach to the assets in which they invest.

Some banks are already taking account of lending risks linked to carbon-intensive sectors, consumer loans secured on diesel vehicles and mortgages for landlords who own rental properties that do not meet new energy efficiency standards.

Other financial firms are asking the BoE to provide more prescriptive recommendations or to require more mandatory disclosures of environmental risks, Carney added.