The Governor of BoE, Mark Carney, launched the "COP26 Private Finance Agenda" to help private finance support the whole economy transition to net zero. The objective of the Agenda is that every professional financial decision will need to take climate change into account. The right framework for reporting, risk management, and returns will embed these considerations and help finance a whole economy transition. To achieve net zero, every company, bank, insurer, and investor will need to adjust their business models for a low carbon world. BoE has also published the speech of Mark Carney on the launch of COP26 Private Finance Agenda.
The following are the key highlights of the COP26 private finance strategy:
- Refine climate-related financial disclosure to increase quantity and quality of reporting
- Agree potential paths to mandatory reporting at domestic and international levels
- Ensure that firms and investors can measure and manage the risks in the transition to a net zero world
- Assess the resilience of firm’s strategies to net zero transition through stress tests. Develop open source, business-relevant reference scenarios for regulators, financial firms, and businesses to test strategic resilience
- Encourage Multilateral Development Banks to report their own emissions and exposure to climate risks, in line with the Taskforce for Climate-related Finance Disclosures (TCFD)
- Work with private sector to promote the most promising and impactful financial innovations in sustainable finance (including transition bonds, contingent climate securitizations, and the scaling up of rapid private markets for carbon offsets and nature-based solutions)
Keywords: Europe, UK, Banking, Insurance Securities, Private Finance Agenda, ESG, Disclosures, TCFD, Climate Change Risk, Reporting, Sustainable Finance, COP26, BoE
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.