Beautiful Virgin Islands

Monday, Sep 01, 2025

Bank of England tells banks: 'Take climate action now or face profits hit'

Bank of England tells banks: 'Take climate action now or face profits hit'

The stress test involved measuring the ability of the 19 banks and insurers to understand how climate change will affect their business models and if they hold enough capital to cover climate-related risks.
The Bank of England has told banks to take climate action immediately or face a hit to annual profits of up to 15%.

The warning comes following the first comprehensive examination of how Britain's financial system will cope with climate change and the stresses involved in shifting to a net zero carbon economy by 2050.

The BoE said that banks and insurers would be able to manage these costs if they acted now - but any delay could mean higher costs for them and their customers.

BoE deputy governor Sam Woods said: "The first key lesson from this exercise is that over time climate risks will become a persistent drag on banks' and insurers' profitability - particularly if they don't manage them effectively.

"While they vary across firms and scenarios, overall loss rates are equivalent to an average drag on annual profits of around 10-15%."

The stress test involved measuring the ability of the 19 banks and insurers to understand how climate change will affect their business models and if they hold enough capital to cover climate-related risks.

These could include things like a fall in the value of property and other assets on their books, although there is no pass or fail mark as the test is still experimental in nature.

The most severe scenario posed was one where no additional measures were taken to cut the rise in global temperatures.

Under this scenario, properties at risk of flooding would be almost impossibly expensive to insure, and banks and insurers could face losses of up to £350bn if they took no action.

Mr Woods said: "To the extent that climate change makes the distribution of future shocks nastier, that could imply higher capital requirements, all else equal."

But Mr Woods warned that banks and insurers would have to keep financing carbon-intensive sectors of the economy to ease the net zero transition.

"Cutting off finance to these corporates too quickly could prove counterproductive, and have wide-ranging macroeconomic and societal consequences, including through elevated energy prices - potentially akin to those whose negative effects we are experiencing today," he said.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Chinese and Indian Leaders Pursue Amity Amid Global Shifts
European Union Plans for Ukraine Deployment
ECB Warns Against Inflation Complacency
Concerns Over North Cyprus Casino Development
Shipping Companies Look Beyond Chinese Finance
Rural Exodus Fueling European Wildfires
China Hosts Major Security Meeting
Chinese Police Successfully Recover Family's Savings from Livestream Purchases
Germany Marks a Decade Since Migrant Wave with Divisions, Success Stories, and Political Shifts
Liverpool Defeat Arsenal 1–0 with Szoboszlai Free-Kick to Stay Top of Premier League
Prince Harry and King Charles to Meet in First Reunion After 20 Months
Chinese Stock Market Rally Fueled by Domestic Investors
Israeli Airstrike in Yemen Kills Houthi Prime Minister
Ukrainian Nationalist Politician Andriy Parubiy Assassinated in Lviv
Corporate America Cuts Middle Management as Bosses Take On Triple the Workload
Parents Sue OpenAI After Teen’s Death, Alleging ChatGPT Encouraged Suicide
Amazon Faces Lawsuit Over 'Buy' Label on Digital Streaming Content
Federal Reserve Independence Questioned Amid Trump’s Push to Reshape Central Bank
British Politics Faces Tumultuous Autumn After Summer of Rebellions and Rising Farage Momentum
US Appeals Court Rules Against Most Trump-Era Tariffs
UK Sought Broad Access to Apple Users’ Data, Court Filing Reveals
UK Bank Shares Dive Over Potential Tax on Sector
Germany’s Auto Industry Sheds 51,500 Jobs in First Half of 2025 Amid Deepening Crisis
Bruce Willis Relocated Due to Advanced Dementia
French and Korean Nuclear Majors Clash As EU Launches Foreign Subsidy Probe
EU Stands Firm on Digital Rules as Trump Warns of Retaliation
Getting Ready for the 3rd Time in Its History, Germany Approves Voluntary Military Service for Teenagers
Argentine President Javier Milei Evacuated After Stones Thrown During Campaign Event
Denmark Confronts U.S. Diplomat Over Covert Trump-Linked Influence in Greenland
Starmer Should Back Away from ECHR, Says Jack Straw
Trump Demands RICO Charges Against George Soros and Son for Funding Violent Protests
Taylor Swift Announces Engagement to NFL Star Travis Kelce
France May Need IMF Bailout, Warns Finance Minister
Chinese AI Chipmaker Cambricon Posts Record Profit as Beijing Pushes Pivot from Nvidia
After the Shock of Defeat, Iranians Yearn for Change
Ukraine Finally Allows Young Men Aged Eighteen to Twenty-Two to Leave the Country
The Porn Remains, Privacy Disappears: How Britain Broke the Internet in Ten Days
YouTube Altered Content by Artificial Intelligence – Without Permission
Welcome to The Definition of Insanity: Germany Edition
Just a reminder, this is Michael Jackson's daughter, Paris.
Spotify’s Strange Move: The Feature Nobody Asked For – Returns
Manhunt in Australia: Armed Anti-Government Suspect Kills Police Officers Sent to Arrest Him
China Launches World’s Most Powerful Neutrino Detector
How Beijing-Linked Networks Shape Elections in New York City
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
2 Australian Police Shot Dead In Encounter In Rural Victoria State
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
×