On 9 November 2020, there was published the following speeches:
- The time to push ahead on tackling climate change. In this speech the Governor of the Bank of England (BoE), Andrew Bailey, discusses climate change and the role of the financial system. Among other things Mr Bailey announces the launch date of a climate stress test – June 2021. The exercise will explore three different climate scenarios, testing different combinations of physical and transition risks over a 30-year period. The BoE expects to use the exercise as a tool to size the risks faced in these scenarios, to understand how different bank and insurance business models will be affected and how they might respond, and finally as a way of improving firms’ risk management practices through the process of carrying out the exercise. The BoE set out its proposed approach to this exercise in a discussion paper at the end of last year. Building on the feedback it received in response to that paper, ahead of the launch, it will share with participants more detail on some key aspects of the exercise – for example around data requirements and scenario variables. The BoE will not use the results to size firms’ capital buffers but Mr Bailey makes the point that this does not mean that firms should not be thinking about near-term capital requirements. Firms should assess how climate risks could impact their business and review whether additional capital needs to be held against this.
- Green Horizon Summit: Rising to the Climate Challenge. In this speech Nikhil Rathi, FCA CEO, discusses climate change and announces that from 1 January 2021 new rules will be introduced requiring premium listed companies to make better disclosures about how climate change affects their business, consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). The FCA will also consult in the first half of 2021 on extending the scope of these rules and on introducing TCFD obligations for asset managers, life insurers and pension providers.