PRA writes to firms on climate-related risks

Sam Woods has written to CEOs of all PRA-regulated firms with PRA’s conclusions from its thematic review of firm’s climate-related risk plans.

The letter notes that firms were asked to have in place by October 2019 an implementation plan for dealing with climate-related financial risks, and PRA expects them firmly to embed their approaches by the end of 2021.  So, by then, firms should be showing that they have implemented PRA’s expectations in SS3/19.  PRA thinks there are few barriers to full implementation in some areas but recognises there may be challenges in others.

It has reviewed a large number of firms’ plans, and found most are making good progress. It has produced examples of good practice, and highlighted where it sees gaps between firms’ intentions and PRA’s expectations. It looks at governance, risk management, scenario analysis and disclosure, noting where some firms are not at hte point PRA would hope them to be.

PRA will continue to engage with firms, particularly the designated SMF holder, and says firms should expect to find climate change a theme in regular supervisory interaction.

Emma Radmore