Bank of England tells banks to speed up plans for climate change risks

[LONDON] Only a small minority of banks in Britain are planning properly to mitigate risks to their businesses from climate change and the shift to a low-carbon economy, the Bank of England said on Wednesday, adding it would be pushing lenders to take action.

The BoE said just 10 per cent of banks in a survey it conducted, covering 90 per cent of Britain's banking sector, were managing the risks with long-term, comprehensive plans.

Banks have begun to consider the most immediate physical risks to their business models such as exposure to mortgages on homes that are at risk of flooding, or to investment in countries that could be hit by extreme weather, the BoE said.

But 30 per cent of them still only considered climate change as a corporate social responsibility issue, the BoE said.

The British central bank, which oversees the City of London global financial hub, said it would consult with banks on what it expected them to be doing to prepare for climate change, saying there should be board-level engagement with the issue.

The BoE's Financial Policy Committee will also consider whether risks from climate change to financial stability should be part of regular stress testing of lenders.

"Financial policymakers will not drive the transition to a low-carbon economy, but we will expect our regulated firms to anticipate and manage the risks associated with that transition," Bank of England Governor Mark Carney said.

REUTERS