UK financial services not doing enough to manage climate change risks – report

Just one in five UK financial services firms have a well-developed strategy to manage the risks of climate change, according to a new report.

Around half of banks, insurers and asset managers said they are considering a more co-ordinated approach to tackle emissions targets, the survey by global executive search firm Odgers Berndtson added.

Sarah Breeden, the executive director of the Bank of England’s climate risk division, who helped unveil the data at an event hosted by the recruitment firm, said there were encouraging signs but more needed to be done.

She said: “We’re in a much better place now than we were many years ago, but this, at its heart, is a forward-looking risk.

“What matters is what is going to happen in the future, and what companies’ strategies are to deal with these risks over the next 10 or 20 years – but looking ahead that far, is just hard.

“Every single asset on the planet will have a different value in a world of net zero. This affects infrastructure, properties, transport and even agriculture – and so the need to transition creates a very broadly-based risk.”

There is concern among some central banks that financial companies are more focused on the current physical risks linked to climate change, like floods and wildfires.

Less attention is being placed on future “transition” risks, associated with businesses adapting to a zero-carbon world.

Nearly 700 senior executives of financial services firms were polled by Odgers Berndtson.

They were asked about their company’s approach, the key challenges facing their business, and what they most need to smooth the transition to a carbon-free world.

But only 21% said their company has a well-developed strategy and policies to address both physical and transition risks from climate change, with 16% prioritising physical and 22% climate risk. A further 48% said their firms are considering a more co-ordinated approach.

Outgoing Governor of the Bank of England, Mark Carney, has spoken out in recent months that financial institutions are not doing more to tackle climate change.

He is urging companies to take great action and takes up a new role as United Nations special envoy for climate action and finance.

Campaigners and activists are expected to target annual shareholder meetings of big-name banks, including Barclays, to call for changes to investment policies in fossil fuels.