BoE issues warning on financing linked to climate risk

The Bank of England has told banks and insurance companies that it will impose its powers to crack down on them if they default to manage climate risks.

The central bank begins to review a potential introduction of capital requirements linked to unsustainable assets.

The Bank said on Thursday it would take a more active approach to the climate crisis in 2021 when firms in urban areas are required to demonstrate a good understanding and management of the related financial risks.

Companies lagging behind regulations will face action by its regulatory arm, BoE said.

In a climate adaptation report released Thursday the Bank’s Prudential Regulation Authority said such action could include ordering a “skilled persons” review of offending firms that could lead to a “deep-dive audit” or additional monitoring.