(Adds more detail)
By Huw Jones
LONDON, July 1 (Reuters) - Banks and insurers in Britain
must implement by the end of 2021 plans they have drawn up to
deal with risks to their businesses from climate change, the
Bank of England (BoE) said on Wednesday.
The BoE previously told firms to establish a plan by October
2019 to mitigate climate-related risks, such as rising flood
claims, or risks caused by a shift to net-zero emissions that
will hit investments in activities with heavy emissions.
But the bank did not previously give a deadline for
implementing those plans.
"There are some areas of our expectations where few barriers
exist to full implementation, but we recognise that challenges
remain in others," Deputy Governor Sam Woods said in a letter to
heads of banks and insurers that it regulates.
"Where challenges exist we will work closely with firms to
understand how they are seeking to overcome them," he wrote,
setting the end of 2021 as the date to "fully embed" plans to
deal with climate risks.
Limited data meant firms might not be able to calculate in
full the impact on capital by the end of 2021, he said.
"However, you should be able to explain what steps your firm
has taken to ensure that, where appropriate, capital levels
adequately cover the risks to which your firm is, or might be,
exposed," Woods said.
BoE-backed industry guidance on mitigating climate risks was
published this week. Woods said the central bank, which also
acts as a regulator, would offer further guidance.
Sarah Breeden, the BoE's executive sponsor for climate
change, told an online meeting for bankers that disclosures on
climate-related information should soon become mandatory, given
the scale of change required.
She said the BoE and other regulators were looking at ways
to make such disclosures mandatory, adding: "But you do not need
to wait to be forced to disclose. You can choose to act now."
(Reporting by Huw Jones; Editing by Gareth Jones and Edmund
Blair)
