Guidance Notes: Climate-Related Governance and Risk Practices and Disclosures for Banking

The Prudential Authority (PA) has published final Guidance Notes (GNs) on climate-related governance, risk practices, and disclosures for banks. These follow their draft guidance from 2023 and are accompanied by a Feedback Note on public consultations, a Climate Risk Practices Observation Report, and the PA Climate Roadmap for 2024-2026.

Deloitte has analysed these publications in a comprehensive paper, our second on the GNs, following our initial release in August 2023. This edition details the enhancements made to the draft GNs, addresses industry challenges, and outlines updates in governance, strategy, risk management, scenario analysis, stress testing, and metrics.

The paper aims to guide the financial services industry in advancing climate risk management and disclosures, helping institutions build resilience and meet regulatory expectations.

The revised Guidance Notes provide more detailed and structured guidance on integrating climate-related risks into the ICAAP, with an emphasis on aligning with the bank’s overall risk management framework. They also introduced more comprehensive reporting requirements and stressed the importance of actionable outputs from stress-testing and scenario analyses for strategic decision-making.