In 2019 the PRA released a supervisory statement for banks and insurers as to its expectations for firms’ management of financial risks arising from climate change. Following this supervisory statement, the PRA communicated that it expects firms to have fully embedded their approaches to managing climate-related financial risk by the end of 2021.
These new requirements, along with numerous other regulatory initiatives relating to climate change reporting, centre on the format of disclosures as recommended by the Taskforce on Climate-related Financial Disclosure, which is broken down in to four areas:
Metrics & targets.
Climate change presents financial risks to all businesses and all entities need to take action. Whilst larger insurers have the ability to dedicate significant resources to formulating their strategy around climate change, smaller insurers are less able to stand up large programmes in the same manner.
PKF have performed a review of climate change reporting across the insurance sector to date and looked at what smaller insurers may be able to learn from larger insurers who already have their public disclosures up and running, or smaller insurers who have already made good progress. We presented our findings at the Association of Financial Mutuals Annual Conference in October 2021 and the slides from this presentation are available to download. We have also collated the reference materials and examples of good practice noted during our research.
Reference material and examples
PRA’s Supervisory Statement re managing financial risks from climate change
PKF is the UK’s 11th largest accountancy brand and the 8th largest audit practice. With over 160 partners and more than 2,030 staff working from 32 locations, PKF supports clients across the UK.
PKF Littlejohn have a strong reputation in the financial services sector and understanding technically complex public and private businesses is a specialism of ours. We are the 6th largest auditor of listed businesses in the UK with over 120 clients listed on the LSE, AIM or other international exchanges.
Our insurance centre of excellence is focussed on our London offices from which, with over 100 years of experience in the insurance market, PKF has built a solid and comprehensive reputation as one of a small number of UK accounting firms with the specialist expertise to support the industry. We are not only specialists in providing audit and assurance services to the insurance market; our team also includes experts in corporate finance, regulatory compliance, and governance, risk and control.
Our actuarial and IT assurance specialists are all insurance experts embedded in the team. Our dedicated insurance tax experts act for some of the largest insurance groups as tax advisors, providing corporation tax advisory, compliance and provisioning functions.
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