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
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.
EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).
EBA updated the list of other systemically important institutions (O-SIIs) in EU.
BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.
UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.
PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.
MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.
EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.
OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.
ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.