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Climate risks have been and remain a priority for every financial institution. Insurers are indeed at the forefront when a natural disaster occurs, and banks' solvability depends on the management of these risks. WeeFin, through its activities, supports firms in the calculation and management of climate risks and is particularly aware of the many challenges they face regarding data governance, methodologies and internal expertise.
Closely working with the biggest asset managers in Europe as well as with numerous data providers, WeeFin honed the blend of skills required to help state-institutions in their policy development.
Thus, WeeFin answered the consultation from the Bank of England CP10/25 - Enhancing banks’ and insurers’ approach to managing climate-related risks on climate-related risks and how banks and insurers should manage the latter.
The consultation, which started in April 2025 and ended 30st of July 2025, is tackled at all PRA (Prudential Regulation Authority)-regulated entities, from banks, building societies, to insurance firms and reinsurers passing by PRA-designated investment firms.
In 2019, the PRA released its first batch of regulations on how firms should incorporate climate-related risk management. In 6 years, progress has been made, however the need for better guidance and reinforce propositions still loom. Moreover, many institutions still fall short, particularly in governance, risk management, scenario analysis, data quality, and disclosures, concluding in an uneven progress between companies.
Thus, the new propositions try to ensure that firms are more resilient to the growing urgency of climate change and its associated shocks. It adopts a more comprehensive and thorough framework, and expects firms to properly manage climate-related risks by integrating them into key risk processes like ICAAP, ORSA and Solvency II.
Challenges such as limited data and changing methods remain, so the PRA is offering guidance with flexibility on these matters. Some propositions include stronger board oversight, better scenario analysis, and improved climate data use. While no new disclosure rules are introduced, associated firms are encouraged to align with upcoming UK sustainability standards.
The content of the consultation is divided into 7 chapters including, the PRA’s proposals, the PRA objectives analysis followed by the Cost Benefit Analysis, the “Have Regard Analysis”, its impact on mutuals and equality & diversity.
In short, the consultation’s goal is to raise standards in a practical way, supporting a more climate-resilient UK financial system.
WeeFin welcomes the Bank of England’s proposals, which recognise the importance of integrating climate-related risks into banks' and insurers’ risk management. These efforts align with broader ESG goals and help institutions better measure and mitigate financial impacts.
WeeFin, as a provider of ESG data solutions, strongly supports the emphasis on climate-related data. Financial institutions continue to face major challenges around data availability, consistency, and reliability. Effective climate risk management depends on strong data governance, and WeeFin agrees that firms must implement better controls and validation processes to improve data quality and therefore make wiser decisions.
While the proposals promote flexibility and proportionality, WeeFin believes more structured guidance is needed. The lack of specific methodologies, metrics, and thresholds may hinder implementation, especially for firms with limited internal expertise. Without clearer tools, financial institutions risk inconsistent practices and weaker comparability in the way they manage and report climate-related risks.
The PRA’s proposals show a limited level of ambition in relation to ESG risks at this stage. The Bank of England’s proposals have the merit of initiating the systemic and formalised implementation of a climate risk management framework. However, it will be necessary to extend this framework in order to provide for the graduate integration of other environmental topics (e.g. biodiversity) as well as social and governance topics.
The proposals lack guidelines for the effective integration of climate-related risks in the decision-making process. The proposals focus on risk analysis and internal reporting but do not support financial actors in defining targets that would help clarify the actions to be implemented to reduce their exposure to climate-related risks, thereby enabling them to remain competitive.
Through its consultation paper, the Bank of England is going in the right direction, integrating climate risks into financial actors’ processes in order for them to mitigate these risks and ensure their long term continuation.
WeeFin supports the work and ambition of the Bank of England, especially by the identification of relevant guidelines but believes this opportunity still needs to be developed to unlock its full potential.
Indeed, in its current form there is a need for clearer methodological guidance to develop synergies between climate scenarios and strategic decision-making. WeeFin finds that some dispositions of the proposals could be adjusted in order to ensure :
- A right level of flexibility in the application of PRA proposals;
- Methodological guidelines covering the full range of dimensions to identify and manage climate risks efficiently.
Moreover, this solid step forward formalising risk management, should progressively incorporate other ESG dimensions, such as biodiversity, social risks and governance issues, to support a more comprehensive and resilient financial system.
To read our full response to the consultation, click here.
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