UK: CFRF publishes third set of guides to help financial industry manage climate financial risks

The Climate Financial Risk Forum (CFRF), which is chaired jointly by the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA), has published a third set of guides to help financial firms in the UK understand and manage the risks and opportunities from climate change.

The "Session 3 guides" - which have been written by industry for industry - consist of the following:

• A paper on disclosures and managing legal risks, which covers the different TCFD-aligned disclosure regimes in the UK for listed companies, asset managers, life insurance companies and large unlisted companies, public interest entities and LLPs and the trustees of large occupational pension schemes.
• A paper on climate litigation risks, which outlines recent climate litigation trends and legal precedents across the EU, UK, US and Australia and provides best practice recommendations to minimise exposure for financial firms, and in particular, insurers.
• A scenario analysis guide for banks.
• A scenario analysis guide for financial firms.
• A physical risk underwriting guide, which focuses on the insurance industry.
• A paper on mobilising investment into climate solutions.
• A report on industry frameworks and metrics relating to green and transition finance.
• A carbon budget primer for financial institutions.

A separate paper will be published in 2023 focusing on legal considerations relevant to transition plans.

The Session 3 guides build on those published in July 2020 (the “Session 1” guides) and those published in October 2021 (the “Session 2” guides). All of the CFRF guides can be accessed here. 

A number of the Linklaters ESG team have been involved in the drafting of the paper on disclosures and managing legal risks and the paper on climate litigation risks, including Vanessa Havard-Williams, Kim Rybarczyk, Sarah Martin, Annamieke Cook, Menaka Nayar and Stephanie Sebastian.

The recommendations in the CFRF guides represent good practice drawn from the experience and inputs of a wide range of different institutions. They do not constitute financial or other professional advice and should not be relied upon as such.