On 21 October 2021, the Climate Financial Risk Forum (CFRF) published its second set of guides to help the financial industry effectively manage climate-related financial risks. The CFRF has been operating since March 2019 and is chaired jointly by the PRA and the FCA, and brings together senior representatives from across the financial sector, including banks, insurers, and asset managers.
The latest guides are focussed on risk management, scenario analysis, disclosure, innovation, and climate data and metrics and build on the first guide that was published on 29 June 2020.
A total of 10 different outputs have been published by the various CFRF working groups and are provided below:
- Risk Management Working Group: designed to help retail banks, corporate banks, insurers and asset managers produce and implement risk appetite statements that integrate climate-related financial risks.
- Risk Management – Risk appetite statements
- Risk Management – Use cases
- Risk Management – Climate risk training
- Scenario Analysis Working Group: produced practical examples on how firms can incorporate sector specific points when developing an effective approach to scenario analysis.
- Scenario Analysis – Implementation guide
- Scenario Analysis – Data and tools providers spreadsheet
- Disclosure Working Group: collated a number of case studies on disclosure from a variety of organisations that will be of interest to firms as they develop their approach to climate-related disclosures.
- Disclosure – Case studies
- Disclosure – Managing legal risk
- Innovation Working Group: focused on identifying and sharing practical opportunities to mobilise financial capital and steward an economy-wide transition to meet climate targets.
- Innovation – Commentary report
- Innovation – Case study videos
- Climate Data and Metrics: the report on climate data and metrics recommends five areas where climate-related metrics could be employed: Transition Risks; Physical Risks; Portfolio decarbonisation; Mobilising transition finance and Engagement.
- Climate Data and Metrics – Guide