The Bank of England’s climate-related financial disclosure 2023

The Bank of England (BoE) has published the climate-related financial disclosure [report] 2023 in which it
1. outlines the key objectives of its climate strategy and revisions thereto for the upcoming year (please see Graphic 1 below),
2. presents its key activities in the past year to achieve these objectives and the goal to transition to net zero carbon emission by 2050,
3. presents its activities to reduce climate-related risks within its own operations, and
4. summarizes any progress made in the modeling of climate change related risks and the incorporation of such in its own asset portfolio.
The summary below briefly summarizes point 1 and point 2 noted above. For information on activities to reduce climate-related risks within its own operations (point 3) and on the progress as regards the modeling of climate change (point 4), please refer to the enclosed report.
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Graphic 1 – Key objectives of the BoE’s climate strategy

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Key activities in the past year to achieve these objectives
The Bank engaged in a number of activities to address climate-related risks and promote sustainability within the financial sector the key ones of which are briefly described below:
– Publication of the results of its Climate Biennial Exploratory Scenario (CBES) exercise:
The authority has published the findings from the Climate Biennial Exploratory Scenario (CBES) exercise, which involved the assessment of the level and scope of exposure to climate change risks of UK insurance undertakings and banks. The key aim was to identify potential vulnerabilities in the financial system. Subsequent to the exercise, the BoE’s Prudential Regulation Authority (PRA) sent out a „Dear CEO Letter“ describing „thematic observations on firms’ levels of embeddedness“ as regards climate change-related risks.
– Continued active supervision of banks and insurers against climate expectations and reporting on the progress observed:
The BoE actively engaged in the monitoring and supervision of banks and insurers to ensure they are meeting the climate expectations set by the Bank. These expectations involve measures to mitigate climate change-related risks, promote sustainable practices, and align with international climate goals. The BoE regularly reports on the progress observed by financial institutions, ensuring accountability and encouraging ongoing improvements in climate-related performance.
– The convening of a research conference and publication of a report to explore links between climate and regulatory capital:
In October 2022, the Bank of England hosted a conference entitled „Climate and Capital“, where experts and stakeholders gathered to explore and discuss the connections between climate change and regulatory capital. This conference aimed to explore and promote a better understanding of how climate risks and sustainable practices impact the capital requirements of financial institutions. In March 2013, the Bank also published a report which provided an update on Bank activities and findings in the past year as regards the capturing of climate-related risks in the banking and insurance sector, including the assessment of these risks via indirect risk measures such as credit or litigation risks (please see EventID 20163 in this context for more information on the report).