Lenders and insurers face £340bn hit from unchecked climate risk
Britain’s biggest lenders and insurers face losses of more than £330bn by 2050 if governments allow carbon emissions to rise unchecked, the Bank of England has warned.
The bank has concluded that while financial businesses were “making good progress in some aspects of their climate risk management”, it was not enough. “UK banks and insurers still need to do much more to understand and manage their exposure to climate risks,” it said.
The regulator found that, without early action, companies would suffer a surge in loan and mortgage defaults, investment losses, and climate-related lawsuits – particularly for insurers – worth £334bn across the UK’s 19 largest banks and insurers by 2050.
Britain’s biggest lenders and insurers face losses of more than £330bn by 2050 if governments allow carbon emissions to rise unchecked, the Bank of England has warned.
The bank has concluded that while financial businesses were “making good progress in some aspects of their climate risk management”, it was not enough. “UK banks and insurers still need to do much more to understand and manage their exposure to climate risks,” it said.
The regulator found that, without early action, companies would suffer a surge in loan and mortgage defaults, investment losses, and climate-related lawsuits – particularly for insurers – worth £334bn across the UK’s 19 largest banks and insurers by 2050.
The results of the test, which was launched almost a year ago, had been highly anticipated. The exercise involved seven lenders, including Barclays, HSBC and NatWest, that account for about 70% of Britain’s lending to households and businesses.
It encompassed insurers such as Aviva, Direct Line and RSA, which represented about 65% of the life market and 60% of the general insurance market, and 10 syndicates in the Lloyd’s of London insurance market also participated.
In the early action model, during a 30-year transition, cumulative climate-related losses suffered by the businesses that participated in the test would reach £209bn, the bank estimated.
Late action by governments would result in £289bn of losses, while this would rise to £334bn if no further measures to lower emissions were taken by countries.
The Times (£)
The Guardian
