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PRA and FCA establish a joint climate financial risk forum

Source(s): Acclimatise
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By Robin Hamaker-Taylor

The Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) of the Bank of England have established the Climate Financial Risk Forum (CFRF) in early March 2019. The Forum is comprised of firms from across the financial system. The fill list of 17 current members is as follows:

  • Banks: BNP Paribas; HSBC; JP Morgan; RBS; Yorkshire Building Society
  • Insurers: Aviva; Legal & General; Lloyd’s of London; RSA Insurance Group; Zurich
  • Asset Managers: Blackrock; Hermes; Invesco; Schroders; Standard Life Aberdeen
  • Others: Greening Finance Initiative; London Stock Exchange Group

Four working groups have been set up, which will develop guidance in each of the following areas: risk management, scenario analysis, disclosure, and innovation. Working groups will allow wider membership, including academics and other members of industry, in order to allow them to draw on expertise as necessary.  

Bank of England Governor, Mark Carney, explained the reasoning behind the establishment of the CFRF during his 21st March speech at the European Commission High-Level Conference. The Prudential regulation Authority (PRA) and the Financial Conduct Authority (FCA) established the Forum as it recognised the need for capacity building within the finance industry and need to develop best practices.

Regulators understand that despite the progress of firms toward climate-related risk management, there is still work to do with regards to their strategic approach to minimise these risks, including scenario analysis. The Forum aims to allow progress in this area by “developing practical tools and approaches to address climate-related financial risks,” according to a statement to the press. The Forum will meet three times per year and will report back to executives of both the PRA and FCA. Each of the four working groups will be chaired by a member of the Forum and will meet more frequently than the CFRF, reporting back at each CFRF meeting.

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Themes Climate change Private sector Risk identification and assessment
Country and region United Kingdom of Great Britain and Northern Ireland
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