International engagement and initiatives
The financial and economic consequences of climate change are not solely domestic concerns. As such, we play in active role in supporting a co-ordinated international approach to climate change. For example, through our work with other central banks and financial supervisors, playing prominent roles in international fora (such as the G7 and G20), and by working with the Government to deliver on its COP26 agenda.
We also engage in the climate-related workstreams of standard setters and international bodies. For example, we are contributors to the climate-related work of the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB).
Central Banks and Supervisors Network for Greening the Financial System (NGFS)
We are a founding member of the Central Banks and Supervisors Network for Greening the Financial System (NGFS) and sit on the steering committee. The NGFS was co-founded by eight central banks and supervisory authorities in December 2017, and its membership has since grown to over 90 members and 14 observers.
We have played a leading role in developing the network’s understanding on climate-related issues, in part, through Sarah Breeden’s chairing of the NGFS macrofinancial workstream (WS2). In June 2020, the NGFS published a first set of climate scenarios alongside a guide to climate scenario analysis for central banks and supervisors. The NGFS climate scenarios have been developed under WS2 to provide central banks and supervisors, as well as financial firms and companies, with a common starting point for analysing climate risks under different future climate pathways. A second vintage of the NGFS scenarios, along with a dedicated website, were published in June 2021.
Through the NGFS, we aim share our own experience, learn from others, and promote consistent and effective responses to climate risks by central banks and supervisors across the world.
Sustainable Insurance Forum
We are also co-founders of the Sustainable Insurance Forum (SIF). SIF is a global network of insurance supervisors and regulators, who are working together on sustainability challenges facing the insurance sector, including climate change.
In 2020, the SIF published a climate-related question bank for insurance supervisors and, alongside the International Association of Insurance Supervisors (IAIS), published a landmark draft paper on the supervision of climate risks in the insurance sector. Anna Sweeney, our Executive Director of Insurance Supervision, is the chair of the SIF and Vicky Saporta, our Executive Director of Prudential Policy, is chair of the IAIS.
Supporting enhanced climate disclosure
To allow markets to better assess, price and manage climate-related financial risks, the Financial Stability Board (FSB), at the request of G20 leaders, established the industry-led Task Force on Climate-related Financial Disclosures (TCFD).
The TCFD’s framework is increasingly becoming the global standard for climate disclosures. We used this framework for our own annual climate-related financial disclosure, which was first published as part of our annual reporting for the financial year 2019/20, and sets out our approach to managing climate risks.
We are an official supporter of the TCFD recommendations. In November 2020, we, alongside others in the joint Government-Regulator TCFD Taskforce, set out a roadmap towards mandatory TCFD-aligned climate disclosures across the UK economy by 2025.
Additionally, when the IFRS Foundation consulted on establishing a Sustainability Standards Board in November 2020, in publicly supporting the proposals, we recommended that to promote global consistency, future global sustainability standards should build on the framework and recommendations of the TCFD.
Supporting increased technical co-operation and assistance
We support the work of other central banks and financial regulators on the issue of climate change, in part through our Centre for Central Banking Studies (CCBS).
For decades, we have been providing international central banking technical co-operation and assistance to equip central bankers and financial regulators with the skills and knowledge they need to tackle the challenges they face. In recent years, this has included assistance on climate change.
In partnership with the UK’s Foreign, Commonwealth and Development Office (FCDO), we are planning to host a series of workshops on climate change in 2021. These will be aimed at central bankers and financial regulators who handle climate related issues in their institutions. Find out more on this programme.
We support the Central Banks’ and Supervisors’ Climate Training Alliance (CTA), established by the Bank for International Settlements (BIS), International Association of Insurance Supervisors (IAIS), NGFS and SIF. The Climate Training Alliance aims to support technical cooperation and assistance on climate risks among central banks and financial supervisors.