184-25 Supervisory Statement 3/19: Enhancing banks' and insurers' approaches to managing the financial risk from climate change

Summary

This supervisory statement (SS) is relevant to all UK insurance and reinsurance firms and groups, ie those within the scope of Solvency II including the Society of Lloyd’s and managing agents (‘Solvency II firms’) and non-Solvency II firms, (collectively referred to as ‘insurers’), banks, building societies, and Prudential Regulation Authority (PRA) designated investment firms (collectively referred to as ‘banks’). ‘Firms’ will be used to refer to both insurers and banks. Climate change, and society’s response to it, present financial risks which are relevant to the PRA’s objectives. While the financial risks from climate change may crystallise in full over longer time horizons, they are also becoming apparent now. The PRA’s reviews of current practice in the banking and insurance sectors have highlighted that, while firms are enhancing their approaches to managing the financial risks from climate change, few firms are taking a strategic approach that considers how actions today affect future financial risks.

Thumbnail image for This supervisory statement (SS) is relevant to all UK insurance and reinsurance firms and groups, ie those within the scope of Solvency II including the Society of Lloyd’s and managing agents (‘Solvency II firms’) and non-Solvency II firms, (collectively referred to as ‘insurers’), banks, building societies, and Prudential Regulation Authority (PRA) designated investment firms (collectively referred to as ‘banks’). ‘Firms’ will be used to refer to both insurers and banks. Climate change, and society’s response to it, present financial risks which are relevant to the PRA’s objectives. While the financial risks from climate change may crystallise in full over longer time horizons, they are also becoming apparent now. The PRA’s reviews of current practice in the banking and insurance sectors have highlighted that, while firms are enhancing their approaches to managing the financial risks from climate change, few firms are taking a strategic approach that considers how actions today affect future financial risks.

Issuer

United Kingdom

Year

2019

Region

Europe

Policy Type

Disclosure

Geographical scope

National

Mandatory or voluntary

Voluntary

Main industries targeted

Finance & Insurance
Construction
Arts, Entertainment, & Recreation

Restrictiveness

Very High

Sustainable Development Goals (SDGs)

SDG 2: Zero Hunger
SDG 8: Decent Work and Economic Growth
SDG 10: Reduced Inequality
SDG 13: Climate Action
SDG 14: Life Below Water