As the fight against climate change continues to expand in industry upon industry, many of the big players in finance are readjusting their policies to ensure they can aid the fight.
This is no different in the case of the Bank of England (BofE). The bank recently underlined how it is doing its bit in the battle against the apocalyptic threat of global warming.
In the face of growing climate challenges, the BofE said it is working to build the resilience of UK banks and insurers, tackle risks that emerge from the move to net zero and support the global effort of climate change.
According to BofE, as climate change increases the risks for firms that provides loans or insurance for people, it is key that banks and insurers manage these risks or this could led to their businesses being left exposed.
When discussing how it keeps the UK’s financial system stable in the face of climate change, the bank said the one way to do this is to get people who work for banks and insurers to think about what might happen as a result of climate change and the different kind of things that could happen.
The BofE also claims it asks the same group to think about the effect of higher global temperatures on their businesses and customers, and how they would manage this difficult situation. The bank noted when it does this is it not only thinking about individual firms but the UK’s financial system as a whole, as this helps to understand where it is most vulnerable.
How does the bank support the move to net zero? It claims it helps UK banks and insurers to look at and manage the risks they face from climate change, with one way a bank can reduce its own risk is if it helps its business customers to invest in reducing greenhouse gas emissions.
The BofE also asks companies to be more open and transparent about how they affect the environment as well as the climate risk they face. This latter point, the BofE claims, helps investors to decide which firms to invest in, helps consumers to decide which goods and services to buy and helps governments to decide what policy actions to take.