The test analyzes the ability of major UK banks and insurance companies to adapt to the shift towards a net-zero economies
The Bank of England outlined a stress test on Tuesday on the UK’s financial system’s ability to deal with the threat of climate change.
He added that the findings have not yet been used to determine capital requirements.
– Advertising –
The central bank test will analyze the capabilities of major UK banks and insurance companies, including HSBC, Barclays and AVIVA, in addition to the effects of extreme weather conditions. .
Because the testing is relatively new, we will not compile the results to individual companies at this stage, and will publish the results in May 2022. However, this date is earlier.
This test includes three specific scenarios covering 30 years. First, it considers early actions to reduce emissions by governments around the world, then a delayed action, and ultimately a prospect of not taking additional action.
These scenarios are reviewed using two criteria: First, there are physical effects such as fires and floods, as well as financial risks such as dramatic changes in asset value and carbon prices.
In response to the publication of the Bank of England’s Climate Stress Test Scenario this morning, positive money senior economist David Balmes said:
“While bank climate scenario analysis may be a useful exploratory exercise, it’s time to move from exploration to acting. Scenario analysis accurately measures highly complex climate-related financial risks. We already know enough about the dangers of the climate crisis to justify current regulatory actions because we can’t,” Birms said.
“It appears they are concerned that the Bank of England will use climate stress tests to exclude them to inform changes in capital requirements. Climate Capital Rules, which reflect the high risk of fossil fuel investment, are the government’s climate plan and “It is a necessary necessity to ensure the financial stability and consistency of the banks, and banks should implement such policies without delay.”
“By delaying the implementation of climate capital regulations, banks will protect financial stability and undermine their obligation to support net zero.”
