BoE to Launch Climate Biennial Exploratory Scenario Exercise in June
BoE announced plans to launch the Climate Biennial Exploratory Scenario (CBES) in June 2021, with the publication of scenarios for this exercise. In December 2020, BoE will inform participants about the high-level approach for the CBES in a number of key areas, including counterparty exposure data. It will also release a provisional set of scenario variables to be included in the exercise. BoE plans to release a set of draft data templates as well as a draft qualitative questionnaire for feedback from participants in February 2021, with the BoE expecting to release a finalized set of data templates and qualitative questionnaire. in April 2021. End of December 2020 will be the balance-sheet cut-off date for the exercise, with the participants' initial submissions due by the end of September 2021.
These decisions reflect feedback that BoE received following the publication of its December 2019 discussion paper on design of the 2021 biennial exploratory scenario on the financial risks from climate change. In addition to the Society of Lloyd’s (10 selected Managing Agents), the following institutions are being invited to take part in this exercise:
Large UK banks and building societies |
Large UK life insurers |
Large UK general insurers |
---|---|---|
Barclays |
Aviva (Group) |
Aviva (Group) |
Lloyds Banking Group |
Legal & General (Group) |
Direct Line (Group) |
HSBC |
M&G (Group) |
RSA (Group) |
Royal Bank of Scotland |
Phoenix (Group) |
AXA (UK entity only) |
Santander UK |
Scottish Widows (Group) |
Allianz (UK entity only) |
Standard Chartered |
AIG (UK entity only) |
|
Nationwide Building Society |
BoE will use the 2021 biennial exploratory scenario to explore the financial risks posed by climate change. The exercise will test the resilience of the current business models of the largest banks, insurers, and the financial system to climate related risks and, therefore, the scale of adjustment that will need to be undertaken in coming decades for the system to remain resilient. In December 2021, BoE plans to announce the decision on whether to run a second round of the exercise. In the event of a second round, BoE will publish results at the end of the first quarter of 2022.
Related Links
Keywords: Europe, UK, Banking, Insurance, Stress Testing, ESG, CBES, Climate Biennial Exploratory Scenario, Climate Change Risk, Implementation Timeline, BoE
Featured Experts
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager
Nihil Patel
Data scientist; SaaS product designer; credit portfolio analyst and product strategist; portfolio modeler; correlation researcher
Previous Article
PRA Consults on Designation of Firms in Certain Consolidation GroupsRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.