Climate Financial Risk Forum (CFRF) guide
On 29 June 2020 the CFRF published its guide to help the financial industry approach and address climate-related financial risks. The guide aims to help financial firms understand the risks and opportunities that arise from climate change, and support firms as they adapt their risk, strategy and decision-making processes to reflect climate-related financial risks.
The guide considers how firms can plan for the impact of climate policies over different time horizons, assess their exposure to climate-related financial risks and adapt their businesses in response.
This guide includes a summary co-produced by the PRA and the FCA. There are also four industry-produced chapters covering a range of topics:
The PRA and FCA have convened and facilitated CFRF discussions but do not accept liability for the views expressed in this guide, which do not necessarily represent the view of the regulators and in any case do not constitute regulatory guidance. The guide is based on current good practice, which will continue to evolve. Firms will need to judge for themselves what a proportionate application of the guide’s recommendations means for them.
The working groups recognise that embedding climate risk management will take a number of years. This guide represents a starting point for firms, highlighting how they can develop their capability and capacity over the coming years.
The CFRF will build on this guide, by developing new materials that progress the management of climate-related financial risks. Also, the CFRF will continue engage with firms on the issues they face and seek their views on areas where the recommendations could be developed further.
A webinar event was held on 29 June 2020 to mark the launch of the guide. A recording of the event is available, along with the slides and video of welcoming remarks from Andrew Bailey (Governor of the Bank of England) and Chris Woolard (Interim CEO of the FCA).