The Bank’s second annual climate disclosure report published today sets out its approach to managing risks from climate change across its operations.
The disclosure report covers the Bank’s climate change strategy, the governance structures and processes around its climate-related work, and the measurement and management of climate-related risks across its physical and financial operations.
As with the previous report published in June 2020, which led to the Bank receiving the Green Initiative award from Central Banking, the report is aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) framework and supplements the climate-related financial risk disclosure in the Bank of England Annual Report and Accounts 2020/21.
This year’s report builds on the first by:
- deepening the analysis of our own balance sheet using the latest climate data and modelling techniques;
- highlighting progress made on the Bank’s climate-related work plan;
- reflecting changes in the remits and recommendations to the Bank’s policy committees; and
- clarifying the outcomes the Bank seeks to achieve through its refreshed climate strategy.
The report also sets out how the Bank has further embedded climate change into its internal governance and risk management frameworks, as part of its organisation wide approach.
The Bank’s analysis shows that emissions associated with its physical and financial operations have continued to decline in recent years. For the first time, the report includes scenario analysis drawing on the latest data and modelling techniques to estimate the financial impact of climate-related risks associated with the Bank’s financial asset portfolios. In addition, the report includes preliminary analysis of the emissions impact of staff working remotely during 2020.
The Bank continues to integrate the risks from climate change and the transition to a net-zero economy into all of its activities, in ways that strengthen and deepen our ability to deliver our statutory objectives. With that in mind, we have become the first central bank to set out a comprehensive framework for greening a monetary policy portfolio, and we have committed to reducing emissions from our own physical operations to net zero by 2050 at the latest. We will also continue to hold the firms we regulate to high standards by assessing their progress against our climate-related supervisory expectations and their resiliency to different climate scenarios in our recently launched Climate Biennial Exploratory Scenario exercise.