Climate change creates financial risks that will affect us all. These risks arise through two primary channels:
- physical effects of climate change; and
- impact of changes associated with the transition to a carbon-neutral economy.
We have highlighted the urgent need to assess, manage, and deepen our collective understanding of the financial risks from climate change.
To ensure the market has the right information to price climate-related risk, we have been making the case for consistent, comparable, and comprehensive climate disclosures.
As a prominent public institution at the centre of the financial system, we recognise the importance of developing a thorough understanding of our own climate-related financial risks and putting in place processes to develop strategy and manage those risks effectively.
In line with our expectations of financial firms, we have published our first report setting out our approach to managing the risks from climate change across our entire operations, including the steps we have taken to improve our understanding of these risks in future years.
This report supplements the climate-related financial risk disclosure in the Bank of England Annual Report and Accounts - 2020, and climate-related risk disclosure will be part of our annual reporting from now on.
What this report covers:
- Our approach to climate-related risk disclosure
- The governance structures and processes we use to manage climate-related financial risk
- Our approach to setting climate strategy and managing its implementation
- Our approach to climate-related financial risk management, including our targets and the metrics we track