July 02, 2019

PRA, FCA, Financial Reporting Council, and The Pensions Regulator (UK Authorities) published a joint statement on climate change, in support of the launch of the Green Finance Strategy of the government. The UK Authorities welcome the coordinated approach under the Green Finance Strategy. The Green Finance Strategy is a comprehensive approach to greening financial systems, mobilizing finance for clean and resilient growth, and capturing the resulting opportunities for UK firms.

The statement notes that climate change presents far-reaching financial risks relevant to the mandates from both physical factors, such as extreme weather events, and transition risks that can arise from the process of adjustment to a carbon-neutral economy. Financial risks will be minimized by achieving an orderly transition and via a collective response. The UK Authorities welcome the action being taken as part of the UK’s Green Finance Strategy to ensure a coordinated approach and look forward to further collaboration to advance progress in the near term on climate-related issues. This strategy recognizes the role of the financial sector in delivering global and domestic climate and environmental objectives. It sets out the proposals for green finance at the heart of delivering the Clean Growth Strategy, 25-year Environment Plan, and Industrial Strategy of the UK. It also details how the proposals support the UK economic policy for strong, sustainable, and balanced growth.

The joint statement includes a message from Sam Woods, the Deputy Governor for Prudential Regulation, who said: “Climate change has the potential to create significant financial risks for the firms the PRA regulates. The challenge we face in mitigating these risks is unprecedented, and we need to begin to act now if we are to ensure an orderly transition to a carbon-neutral economy. We will play our part and work with government, fellow regulators and industry through the UK Government’s Green Finance Strategy, the Climate Financial Risk Forum, and the Network for Greening the Financial System.”

 

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Keywords: Europe, UK, Banking, Insurance, Securities, Climate Change, Green Finance Strategy, Pensions Regulator, Financial Reporting Council, Climate Change Risks, FCA, PRA

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