Climate Financial Risk Forum

The Climate Financial Risk Forum (CFRF), co-chaired by the FCA and PRA, met for the second time in July 2019.

Since its inception in March 2019, the CFRF has set up 4 technical working groups on disclosure, scenario analysis, risk management and innovation. Each working group is chaired by a CFRF member and supported by an external secretariat. Membership consists of wider industry participants, including trade associations, to ensure the perspective of a broad range of firms is represented. Each working group has planned the approach they propose to take and the outputs they will deliver in terms of practical guidance / best practice material.

July 2019 meeting

The PRA and FCA hosted the second meeting of the CFRF in July 2019. At the meeting, the working group chairs presented the draft plans and progress to date. The CFRF members agreed the plans, noting the importance of considering the following:

  • how outputs draw upon international best practice
  • how to ensure outputs are suitable for firms of different types, sizes and complexity
  • how to ensure coordination between the working groups

The meeting also discussed the form of the outputs and the timeline for publishing them, as well as how to get wider industry input into the process. It was agreed that the CFRF will aim to publish these outputs in early 2020.

The next CFRF meeting will take place in Q4 2019.

Background and launch

Climate change and society’s response to it presents financial risks and opportunities that are relevant to the PRA’s and FCA’s objectives. While these risks may form in full over time, they are becoming apparent now. Firms are enhancing their approaches to managing these risks, but face barriers to implementing the forward-looking, strategic approach necessary to minimise the risks. The CFRF aims to reduce these barriers by developing practical tools and approaches to address climate-related financial risks.

The objective of the CFRF is to build capacity and share best practice across financial regulators and industry to advance our sector’s responses to the financial risks from climate change.

It brings together senior representatives from across the financial sector, including banks, insurers, and asset managers. The forum will also include observers from trade bodies to represent a broader range of firms and ensure the outputs of the CFRF are communicated to their members.

The forum is chaired by Sarah Breeden (Executive Director of UK Deposit Takers, PRA) and Christopher Woolard (Executive Director of Strategy and Competition, FCA). It will meet 3 times a year and will report to Sam Woods (CEO of the PRA and Deputy Governor at the Bank of England) and Andrew Bailey (chief executive of the FCA).

Current membership

Banks
BNP Paribas
HSBC
JP Morgan
RBS
Yorkshire Building Society
Insurers
Aviva
Legal & General
Lloyd's of London
RSA Insurance Group
Zurich
Asset managers
Blackrock
Hermes
Invesco
Schroders
Standard Life Aberdeen
Other
Green Finance Institute
London Stock Exchange Group