BoE and PRA published their annual reports and accounts for the period of March 01, 2019 to February 29, 2020. The BoE annual report provides information on activities for the preceding year and highlights strategic goals for 2020-21. For the first time, BoE also published a report on the climate-related financial disclosures. In line with the BoE expectations from financial firms, BoE has published the report setting out its approach to managing the risks from climate change across its entire operations, including the steps it has taken to improve understanding of these risks.
A key highlight of the BoE annual report is the work done across BoE in helping UK businesses and households manage through the economic shock from COVID-19 crisis. Other (highlights include putting into place the final major piece in the resolution regime for banks in UK and providing leadership on meeting the challenges from climate change and the provision of detailed climate-related disclosures. The report on climate-related financial disclosure of BoE covers its approach to climate-related risk disclosure, the governance structures and processes BoE uses to manage climate-related financial risk, approach to setting climate strategy and managing the implementation of this strategy, and approach to climate-related financial risk management, including the BoE targets and the metrics it tracks. The strategic goals for 2020-21, as mentioned in the annual report, include
- Maintaining monetary and financial stability in the UK’s new relationship with the EU
- Enhancing the strength, security, and efficiency of internal operations of BoE
- Embracing fintech
- Building greater operational resilience in the financial system
- Ending “too big to fail"
- Facilitating a smooth climate transition through more prolific climate reporting, more robust risk assessments, and the optimization of investors’ returns
The PRA annual report contains annual report of Prudential Regulation Committee, report on certain aspects of ring-fencing (following its implementation on January 01, 2019), and the Annual Competition Report (June 2020). The annual report includes information on the work on ensuring adequate capitalization of firms, supervising for operational resilience, ensuring orderly Brexit, and adapting to changes in the external market. Members of the public are invited to make representations to PRA, by September 18, 2020, on the PRA Annual Report and the way in which PRA has discharged, or failed to discharge, its functions during the period to which the report relates. Members are also invited to make representations on the extent to which, in their opinion, the PRA objectives have been advanced, the PRA has considered the regulatory principles to which it must have regard when carrying out certain of its functions (contained in section 3B of Financial Services and Markets Act 2000, or FSMA), and the PRA has facilitated effective competition in the markets for services provided by authorized firms in carrying on regulated activities in accordance with section 2H of FSMA.
Comment Due Date: September 18, 2020
Keywords: Europe, UK, Banking, Insurance, ESG, Climate Change Risk, Brexit, Ring-Fencing, Annual Report, Disclosures, Strategic Goals, PRA, BoE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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