UK banks to reveal exposure to climate crisis for first time
Bank of England to examine risks rising temperatures and sea levels could pose for financial system
UK banks will for the first time be forced to reveal their exposure to the climate crisis, highlighting the risks that rising temperatures and sea levels could pose for the financial system, as part of the Bank of England’s climate stress tests this year.
The stress tests will put 19 banks and insurers through three climate scenarios, according to an update released on Tuesday, including one in which governments fail to take further steps to curb greenhouse gas emissions, resulting in average temperature increases of 3.3C and a 3.9-metre rise in sea levels. The central bank will be monitoring how those scenarios could affect potential loan losses, as customers default due to slowing growth and economic uncertainty.