ESG / Sustainability regulatory updates from United Kingdom.
We track 35 ESG / Sustainability updates from United Kingdom regulators, published by BoE, FCA and PRA. The archive covers 18 speeches, 7 news items and 3 policy statements. Most recent update: November 2026. Coverage runs from 2025 to 2026.
New UK rules for environmental, social and governance (ESG) rating providers will raise standards in the market, helping investors to make better informed decisions. The new framework brings ESG rating providers into FCA regulation for the first time, covering a market that plays an important role in investment…
AI Analysis
The FCA has finalised PS26/22, bringing in-scope ESG rating providers within FCA authorisation and conduct regulation for the first time. The regime applies from 29 June 2028, with the authorisation gateway opening on 24 June 2027; independent market commentary indicates that providers will need to substantiate methodologies, data quality, AI use, limitations, governance and conflicts, while users should not treat regulated ratings as a substitute for investment due diligence.
Key dates
2026-11-03
FCA publishes PS26/22 and final rules for the ESG ratings regime; Part 1 of Annex D comes into force.
2027-02-01
FCA Pre-Application Support Service is expected to be available to prospective ESG ratings applicants.
2027-06-24 Deadline
FCA authorisation gateway opens. Providers with annual revenue of £500,000 or more should apply during the first application period, from 24 June to 29 July 2027.
2027-07-29 Deadline
End of the first staggered authorisation application period for providers with annual revenue of £500,000 or more.
2027-07-30
Second staggered authorisation application period opens for providers with annual revenue below £500,000.
2027-08-31 Deadline
End of the second staggered authorisation application period for providers with annual revenue below £500,000.
2028-06-29 Deadline
The ESG ratings regime takes effect. In-scope providers must be FCA-authorised and hold the relevant permission before carrying on the regulated activity, unless an exclusion applies; unauthorised activity may breach the FSMA general prohibition and constitute a criminal offence.
Suggested considerations
Firms should map all ESG scores, assessments, opinions and rating products against article 63U, PERG 2.3 and the FCA perimeter guidance, including whether the firm both produces and makes the rating available and whether it is likely to influence a specified investment decision.
Potential applicants should identify the legal entity requiring authorisation or variation of permission and assess whether an exemption applies, including exemptions connected with other regulated activities, investment research, fund marketing, benchmarks and overseas persons.
Firms should perform a gap analysis against PS26/22 covering transparency disclosures, methodology governance, data validation, quality assurance, record retention, complaints handling, rated-entity engagement and advance notification of material methodology changes.
Providers should consider documenting controls for AI and other automated processes, data limitations, model or methodology changes, reproducibility of rating outcomes and the competence, independence and integrity of rating personnel.
Compliance teams may wish to review conflicts arising from charging models, consulting or advisory services, commercial relationships, remuneration and personal transactions, and determine how conflicts will be prevented, managed and disclosed.
Firms should assess governance, senior-management accountability, systems and controls, outsourcing oversight, UK presence expectations and financial-resources and wind-down arrangements relevant to the authorisation application.
Potential applicants should consider engaging with the FCA Pre-Application Support Service from February 2027 and preparing the application materials before the relevant staggered application window.
Users of ESG ratings should consider reviewing supplier due diligence, data procurement, investment governance and sustainability disclosure processes so that ratings are interrogated rather than treated as definitive or objectively comparable ESG measures.
What changed
Providing an ESG rating becomes a regulated activity under article 63U of the Financial Services and Markets Act 2000 (Regulated Activities) Order, subject to the statutory perimeter and exclusions. A provider is generally in scope where it produces and makes the rating available, carries on the activity by way of business, and the rating is likely to influence a decision to make a specified investment; merely distributing another provider's rating is outside this activity.
Compliance impact
This is a high-impact final rule creating a new FCA authorisation gateway and binding ongoing conduct, governance, systems, controls, transparency and conflicts obligations for a previously largely unregulated provider market. Carrying on in-scope activity without the required permission after 29 June 2028 may breach the FSMA general prohibition and constitute a criminal offence, while late or incomplete applications may leave firms unable to continue the activity after commencement.
We have finalised rules to improve transparency and trust in the environmental, social and governance (ESG) ratings market. ... Read PS26/22 (PDF)What we are changingFrom 29 June 2028, firms providing ESG ratings in the UK will need FCA authorisation and to have the relevant permission before carrying on that…
AI Analysis
The FCA has finalised the UK’s first regulatory regime for ESG rating providers under PS26/22. From 2028-06-29, in-scope firms must hold FCA authorisation and the relevant permission, with requirements covering transparency, governance, systems and controls, conflicts of interest, complaints and engagement with users and rated entities.
Key dates
2026-11-03
FCA publishes PS26/22 and final rules; the FEES amendment relating to the regime comes into force.
2027-02-01
FCA expects its Pre-Application Support Service for ESG rating authorisation applications to become available.
2027-06-24
FCA authorisation gateway opens for ESG rating providers.
2027-07-31 Deadline
Larger firms, defined by the FCA as firms expecting at least £500,000 of UK ESG-ratings revenue in the 12 months following application, should apply during the first month of the gateway, before the end of July 2027.
2027-08-31 Deadline
Other firms should apply during the second month of the gateway, by the end of August 2027.
2028-06-29 Deadline
The ESG ratings regime comes into force. In-scope providers must have FCA authorisation and the relevant permission unless an exclusion or exemption applies.
Suggested considerations
Firms should inventory every product, score, opinion, label, ranking, colour-coded category and platform output that assesses one or more environmental, social or governance factors, including products not marketed as ESG ratings.
Compliance teams may wish to apply the PERG 19 decision framework to each product: whether the activity is carried on by way of business, whether the firm produces and makes the rating available, whether investment decisions are likely to be influenced, the territorial connection, and whether an exclusion or exemption applies.
Firms should document the distinction between unranked ESG data and provider-produced ratings, including the methodology, default thresholds, categories and user-configurable outputs embedded in software or analytics platforms.
Potential applicants should identify the legal entity requiring permission, assess whether the activity is standalone or embedded in another regulated service, and prepare a regulatory business plan, governance map, resources assessment and threshold-conditions evidence.
Prospective applicants should use the FCA’s Pre-Application Support Service from February 2027 and consider submitting applications promptly after the 2027 gateway opens.
Larger firms should plan to submit applications during the first month of the gateway, before the end of July 2027, where forecast UK ESG-ratings revenue is at least £500,000 in the 12 months following application. Other firms should plan to apply during the second month, by the end of August 2027.
Firms should perform a gap analysis against PRIN, SYSC, SM&CR, GEN, DISP, ESG-sourcebook and financial-crime expectations, with particular attention to methodology governance, data quality, conflicts, complaints, records, outsourcing and senior-manager accountability.
Providers should review commercial terms, marketing and distribution arrangements to determine whether products could reasonably be expected to influence specified investment decisions, including where outputs are supplied through third-party financial platforms.
What changed
Providing an ESG rating becomes a regulated activity under article 63U of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, as amended by the Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025. The activity generally requires a provider to produce and make available an opinion, score or combination based on an established methodology and defined ranking system, where the rating is likely to influence a decision to make a specified investment.
Compliance impact
This is a high-impact final rule for providers because carrying on the regulated activity without the required permission after 2028-06-29 breaches the FSMA general prohibition and constitutes a criminal offence. Firms that miss the applicable application window, withdraw an application or are refused will be unable to take on new business after commencement and may need to wind down the activity, while timely applicants whose applications remain undecided may continue under the statutory transitional arrangements.
Climate-related risks are increasingly relevant to financial services, affecting consumer outcomes and the effective functioning of markets. We examine how flood risk relates to the mortgage market in England and how it may impact different communities. ...
Why this matters
The document is an FCA analytical report on flood risk exposure of regulated mortgage lending, using Environment Agency flood data mapped to mortgage postcodes. It covers regional exposure, LTV ratios and deprivation, so the sector is Mortgage & Lending and the topic is climate-related physical risk (ESG /...
Given at the 2nd Annual Conference on Sustainable Finance at the Banco de México on 21 October 2026
Why this matters
The speech is by a named Bank of England official on physical climate shocks and monetary policy. Its regulatory relevance lies in the insurance-protection-gap analysis: the speaker says insurers will need to build risk prevention into products and pricing, cites the PS25/25 update to SS3/19, and models spillovers to...
We are consulting on the following changes to the Knowledge Base. ... Why we are consultingOn 30 September 2026 we published Policy Statement PS26/19, setting out the new regime for sustainability disclosures for listed issuers.These new rules will come into force on 1 January 2027.In CP26/5 (PDF) we said that we…
AI Analysis
The FCA is consulting on technical guidance supporting the new UK Sustainability Reporting Standards (UK SRS) disclosure regime for listed issuers, which applies to accounting periods beginning on or after 1 January 2027. The proposals would introduce Technical Note 803.1 on the FCA’s expectations for comply-or-explain disclosures, amend the existing sustainability disclosure note, and remove the TCFD-specific note; market commentary indicates that issuers should prepare for granular explanations, transition-plan reporting and phased implementation reliefs.
Key dates
2026-09-30
The FCA published GC26/6 and PS26/19; the consultation on the proposed Knowledge Base changes opened.
2026-10-28 Deadline
Deadline for comments on the proposed Technical Note 803.1, amendments to TN 801.4 and deletion of TN 802.3.
2027-01-01
The new UK SRS sustainability disclosure rules apply to accounting periods beginning on or after this date.
2029-01-01
The transitional reliefs for Scope 3 and UK SRS S1 disclosures are expected to fall away for accounting periods beginning on or after this date.
Suggested considerations
Compliance teams may wish to review the proposed TN 803.1 and assess whether current annual-report processes can produce sufficiently specific explanations for each UK SRS disclosure that is omitted or only partially provided.
Issuers should consider mapping existing TCFD disclosures, sustainability reporting and climate metrics against UK SRS S1 and UK SRS S2, identifying gaps in governance, strategy, risk management, metrics and targets.
Issuers should consider establishing ownership, evidence trails and internal controls for Scope 3 data, transition-plan disclosures and explanations of non-compliance, including procedures for board or audit committee review.
Listed companies may wish to assess whether they have published a climate-related transition plan and prepare the required statement on its existence and location, or the reasons why no plan has been published.
Issuers should consider confirming whether third-party sustainability assurance has been obtained and how that status will be described in the annual financial report.
Compliance teams may wish to plan for the transitional relief timetable, including the one-year Scope 3 deferral and two-year deferral for UK SRS S1 disclosures, while avoiding reliance on reliefs that will no longer be available for accounting periods beginning on or after 1 January 2029.
Interested parties should consider submitting comments on the proposed Knowledge Base changes to the FCA by 28 October 2026.
Legal, reporting and investor-relations teams may wish to monitor the final version of TN 803.1 before the new rules apply and update disclosure templates, reporting calendars and controls accordingly.
What changed
The FCA proposes to add Primary Market/TN/803.1, “UK SRS sustainability disclosures for listed companies”, explaining the expected level of detail where an issuer complies with, or explains non-compliance with, UK SRS requirements. It proposes consequential amendments to Primary Market/TN/801.4, “Disclosures in relation to sustainability matters, including climate change”, and deletion of Primary Market/TN/802.3, “TCFD aligned climate-related disclosure requirements for listed companies”.
Compliance impact
This is a consultation on guidance rather than a new standalone binding obligation, but it supports final FCA rules that materially change listed-issuer annual-reporting requirements from 1 January 2027. Inadequate UK SRS disclosures or vague explanations may create financial-reporting, governance and regulatory-risk concerns, particularly because the FCA expects explanations to identify omitted requirements, reasons for omission and steps toward future compliance.
Newsletter for primary market participants. September 2026 / No. 66 ... About this editionIn this Primary Market Bulletin (PMB) 66 we:Finalise Technical Notes (TNs) 619.3 'Guidelines on disclosure requirements under the Prospectus Rules: Admission to Trading on a Regulated Market (PRM) and Guidance on specialist…
AI Analysis
The FCA has finalised revised guidance on prospectus working capital statements and is consulting on new guidance for listed companies applying the UK Sustainability Reporting Standards (UK SRS) on a comply-or-explain basis. The changes give issuers limited flexibility to rely on certain uncommitted financing facilities, while creating a near-term implementation and governance workstream for sustainability reporting from accounting periods beginning on 1 January 2027; the FCA has also signalled that cyber incidents require prompt, case-by-case assessment for possible inside information under UK MAR.
Key dates
2026-10-28 Deadline
Deadline for comments on proposed TN 803.1, consequential updates to TN 801.4 and deletion of TN 802.3.
2027-01-01
New UK Listing Rules sustainability disclosure requirements apply to accounting periods beginning on or after this date.
2028-01-01
The FCA expects to focus initially on helping issuers prepare for the first reporting cycle under the new sustainability disclosure regime, which is expected to occur in 2028.
Suggested considerations
Issuers preparing prospectuses should assess whether each uncommitted facility is available for the entirety of the working capital period, document the reasonable worst-case scenario analysis and determine whether a clean or qualified working capital statement is supportable.
Prospectus teams should review the additional disclosure expected under TN 619.3 and ensure that risk-factor drafting is consistent with the working capital conclusion, particularly where financing assumptions may require disclosure under Regulation 23 of the POATRs.
Listed companies should review the proposed TN 803.1 and consider submitting consultation responses to the FCA by 28 October 2026, including views on the level of detail required for both compliance statements and explanations.
Sustainability, finance, legal and company-secretarial functions should map UK SRS requirements to existing TCFD, climate, sustainability and home-market reporting processes, including the one-year Scope 3 and two-year non-climate S1 transitional deferrals.
Issuers should identify financially material sustainability and climate-related risks and opportunities, assess their effect on cash flows, access to finance and cost of capital, and establish data, metrics, targets and controls capable of supporting the first reporting cycle.
Boards and senior management should review governance arrangements, business-model resilience processes, internal controls and training for UK SRS reporting, consistent with Listing Principle 1 and UKLR 2.2.1R.
Companies choosing to explain rather than comply should ensure the explanation is specific, evidence-based and reconciled with annual-report risk disclosures under DTR 4.1.8R rather than relying on generic language.
International issuers should assess whether proposed TN 803.1 permits reliance on equivalent home-market disclosures without creating gaps against UK SRS requirements.
What changed
Final Technical Note 619.3 permits an issuer, in specified circumstances, to take financing under uncommitted facilities into account when preparing a clean working capital statement, provided the facility can reasonably be regarded as available for the entirety of the working capital period. The issuer should provide accompanying disclosure explaining the relevant basis and financing assumptions. If the uncommitted facility cannot be considered available and sufficient committed financing cannot be secured, the prospectus should contain a qualified working capital statement.
Compliance impact
The working capital changes are targeted guidance but may affect prospectus sign-off, financing assumptions, risk-factor drafting and sponsor or adviser assurance. The sustainability provisions create a substantial implementation programme for listed issuers, while the cyber observations increase the importance of rapid escalation and documented UK MAR assessments; failure to make required disclosures or provide an adequate explanation may create listing, disclosure and market-abuse risk.
We have finalised rules requiring listed companies to report against UK Sustainability Reporting Standards (UK SRS), on a comply or explain basis. ... Read PS26/19 (PDF)Why we are making changesWe are replacing the existing climate-reporting rules for listed issuers with requirements aligned with the UK-endorsed…
AI Analysis
The FCA has finalised FCA 2026/56, replacing the TCFD-aligned listed-company climate disclosure regime with UK Sustainability Reporting Standards (UK SRS), the UK-endorsed version of the ISSB Standards. In-scope issuers must report against UK SRS 1 and UK SRS 2 on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027, with first reporting expected in 2028.
Key dates
2026-09-30
FCA published PS26/19 and the final UK Listing Rules (Sustainability Reporting Standards Disclosure) Instrument 2026.
2026-10-28 Deadline
Deadline for responses to the FCA consultation on the proposed Technical Note supporting proportionate application of the comply-or-explain approach.
2027-01-01 Deadline
The final rules and UKLR TP 16 transitional provisions commence; they apply to accounting periods beginning on or after this date.
2028-01-01
First reporting year expected for issuers whose accounting periods begin on or after 1 January 2027, subject to the applicable accounting year-end and transitional reliefs.
2029-01-01 Deadline
For accounting periods beginning on or after this date, the Scope 3 and wider S1 climate-first transitional reliefs have expired and the full UK SRS comply-or-explain framework applies.
Suggested considerations
Listed issuers should map their listing category to the applicable rules in UKLR 6.6, 14.3, 15.3, 16.3 or 22.2 and confirm whether any investment entity, shell-company or other exclusion applies.
Compliance and reporting teams should perform a gap assessment against UK SRS S1 and UK SRS S2, including governance, strategy, risk management, metrics and targets, greenhouse-gas emissions and material sustainability-related risks and opportunities.
Issuers should establish a documented comply-or-explain process capable of identifying each omitted or partial disclosure, the reason for the omission and the remediation steps planned.
Finance and sustainability teams should plan for the one-year Scope 3 relief and the two-year S1 climate-first relief, including the required statement that the relevant UKLR and UK SRS transitional provisions are being used.
Issuers should assess whether UK SRS disclosures can be incorporated by cross-reference under UK SRS S1 Appendix B paragraphs B45 to B47 and ensure referenced documents are accessible and consistently controlled.
Governance teams should decide whether third-party assurance will be obtained and prepare the required assurance-provider, scope, level, standards and accessibility disclosures where assurance is used.
Issuers should document their position on climate-related transition plans and prepare the required location statement or explanation for non-publication.
Reporting teams should plan comparative information: no comparative information is required for the first period in which full or partial UK SRS disclosures are made, but comparatives are required from the immediately following accounting period.
What changed
The rules amend the FCA Handbook, including UKLR 6.6, 14.3, 15.3, 16.3 and 22.2, and ESG 2.2.6R. They require in-scope issuers to include UK SRS S2 climate-related disclosures and UK SRS S1 sustainability-related disclosures in their annual financial reports, or provide specified explanations where disclosures are absent or incomplete. Those explanations must identify the requirements or risks and opportunities not covered, explain why, and describe steps being taken or planned to enable future disclosure.
Compliance impact
This is a high-impact final rule for UK-listed issuers because it creates binding annual-report disclosure obligations across climate and wider sustainability matters, while replacing the existing TCFD framework. Although the comply-or-explain model provides flexibility, inadequate explanations, weak controls or unsupported sustainability data may impair investor decision-usefulness, comparability and market confidence and may attract FCA supervisory attention.
The Bank's Court of Directors acts as a unitary board, setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. Required to meet a minimum seven times per year, it has five executive members from the Bank and up to nine non-executive members.
Why this matters
Court of Directors meeting minutes from Bank of England covering governance matters, annual accounts approval, monetary policy transformation, payments evolution programme, climate transition plan, and operational updates.
This is an informational speech by Bank of England Deputy Governor on climate risks' impact on inflation and monetary policy. While it addresses systemic financial stability concerns through climate-related supply shocks and energy market disruptions, it is primarily educational/analytical rather than prescriptive...
This is a cookie policy notice and website navigation content, not regulatory intelligence. The referenced document (Megan Greene's CV and questionnaire for Treasury Select Committee) is not included in the provided text.
Drax Group PLC (Drax) has announced the FCA has closed its investigation into the company.We undertook an extensive investigation following concerns raised regarding disclosures to the market about the sustainability of Drax’s Canadian biomass. We did not find evidence that justified any further action.Thousands of…
AI Analysis
The FCA concluded its investigation into Drax without taking action after an extensive review of “thousands of pages” and interviews with company personnel, focused on whether Drax’s annual reports and accounts from 2021 to 2023 contained misleading statements or material omissions about biomass sustainability. This matters because it shows the FCA continues to scrutinize **listed-company disclosures** on ESG and sustainability claims, especially where prior regulatory findings or public controversies may indicate potential market disclosure risk.
Key dates
2021
- Period covered by the FCA’s review of Drax’s annual reports and accounts
2022
- Period covered by the FCA’s review of Drax’s annual reports and accounts
2023
- Period covered by the FCA’s review of Drax’s annual reports and accounts
28 August 2024
- Ofgem announced conclusions on Drax’s reporting of biomass profiling data, which later formed the background to the FCA’s interest
2025
- The FCA closed the investigation and confirmed that no further action would be taken
Suggested considerations
Review annual report drafting controls to ensure sustainability statements are supported by underlying source data and governance evidence before publication.
Map ESG and environmental claims to the exact disclosure obligations that apply to listed issuers, including continuing disclosure and annual report requirements.
Test whether statements about biomass sourcing, carbon impact, or sustainability performance could be viewed as misleading without full context or qualifying information.
Maintain a defensible audit trail showing how disputed environmental data, third-party evidence, and management judgments were validated before disclosure.
Escalate any controversy involving regulator findings, whistleblower allegations, or media investigations to disclosure committees and legal counsel early in the reporting cycle.
What changed
- The FCA has closed its investigation into Drax Group PLC and will take no further action.
The FCA confirmed that it reviewed whether Drax’s 2021, 2022 and 2023 annual reports and accounts contained misleading statements or omitted important information for investors.
The FCA stated that its focus was limited to matters within its remit as a listed-company regulator, not a general review of Drax’s broader operations.
The FCA’s approach confirms that sustainability-related market disclosures can be assessed under listed-company continuing disclosure obligations where they affect investor understanding.
The FCA indicated that it will close cases where evidence does not support proportionate action, even after a substantial investigation.
Compliance impact
The practical severity is moderate to high for listed issuers because the FCA’s review shows it will investigate potentially misleading sustainability disclosures and expects accurate, investor-relevant reporting. Non-compliance can lead to enforcement exposure, remediation costs, reputational damage, and intensified scrutiny of future ESG statements even where no action is ultimately taken.
Investment firms could save around £20m a year under new proposals from the FCA to simplify climate reporting for investment products. The FCA estimates it could deliver these savings by replacing detailed product-level reports based on the Task Force on Climate-related Financial Disclosures (TCFD) with simpler, more…
Why this matters
FCA consultation on simplifying climate reporting requirements for investment products. Proposes replacing detailed TCFD product-level reports with simpler disclosures aligned with Consumer Duty. Primarily impacts asset managers and asset owners.
Help us develop a proportionate reporting regime for ESG ratings. Register your interest by 13 May 2026. We're inviting ESG rating providers to join a pilot to inform future regulatory reporting once the regime is live.Our aim is to avoid unnecessary reporting burden for firms over time.The pilot aims to help us…
Speech by Sheree Howard at the APCC Spring Conference 2026. This weekend, tens of thousands of runners will line up in Greenwich Park for the start of the London Marathon.Well done to them – a Netflix marathon is much more my speed.Unlike what’s needed to prepare for a Netflix marathon – opening a bag of sweet and…
Given at the PSE–BdF Conference on International Macroeconomics in Historical Perspective at the Banque de France in Paris
Why this matters
This speech by a central bank official discusses the relationship between macroeconomic policy and economic history, with a focus on topics relevant to banking, investment management, and wealth management firms.
This speech covers the Bank of England's approach to assessing and managing climate-related risks across its core objectives of monetary policy, financial stability, and prudential supervision.
Given at the Bellagio Group event, Bank of England
Why this matters
This speech from the Bank of England Governor discusses global economic imbalances and their impact on the financial sector, covering topics related to prudential requirements, operational resilience, and ESG considerations. It is relevant for banks, asset managers, and wealth managers.
This speech by a Bank of England official covers topics related to the banking and investment management sectors, including prudential requirements, operational resilience, and ESG/sustainability. The content appears to be informational rather than an urgent regulatory update.
Earlier this year, we undertook a refresh of our Sustainable Finance Advisory Committee. In line with good governance, we planned to refresh the membership on a staggered basis, allowing us to bring in new expertise whilst benefiting from some continuity. Following this process, we are pleased to announce the…
Why this matters
This regulatory update announces the appointment of new members to the FCA's Sustainable Finance Advisory Committee, which is relevant for investment management, wealth management, and other financial firms with an interest in ESG and sustainability.
The Bank of England (the Bank) has today launched its second system-wide exploratory scenario (SWES) exercise. This will focus on how the private markets ecosystem operates under stress and the potential implications for UK financial stability and the UK real economy.
Why this matters
This regulatory update from the Bank of England focuses on how the private markets ecosystem operates under stress and the potential implications for UK financial stability and the real economy.
PS25/25 is the PRA's policy statement providing feedback on CP10/25 and issuing updated Supervisory Statement SS5/25, which replaces SS3/19 to enhance banks' and insurers' management of climate-related financial risks through strengthened governance, risk management, scenario analysis, data quality, and disclosures. It matters because it sets a higher regulatory bar for embedding climate risks proportionately into core processes like ICAAP, ILAAP, ORSA, and financial reporting, promoting resilience and strategic decision-making amid evolving climate threats.
Key dates
3 December 2025
- PS25/25 and SS5/25 published; SS5/25 effective immediately, replacing SS3/19
Within 6 months (by ~June 2026)
- Firms assess gaps against new expectations and develop remediation plans (industry guidance)
Ongoing
- Forward-looking, strategic implementation proportionate to risks; PRA may request progress evidence
Suggested considerations
Conduct gap analysis against SS5/25 within 6 months and remediate (e.g., update governance, risk frameworks, CSA processes).
Integrate climate risks into board oversight, strategy, risk registers, ICAAP/ILAAP (banks), ORSA/stress testing (insurers), and financial reporting.
Perform CSA exercises commensurate with exposures, using suitable scenarios to inform decisions; enhance data quality and disclosures.
Ensure senior accountability and alignment with standards like SS1/21.
What changed
The main changes in SS5/25 from SS3/19 and CP10/25 responses include:
Proportionate application clarification: New 'Overarching aims' section in Chapter 3 explains how firms should tailor expectations to their climate risk exposure, business size, and complexity via a...
Governance strengthening: Boards and senior management must actively oversee climate risks, embedding them in strategy and ensuring accountability.
Risk management enhancements: Integrate climate risks into existing frameworks/risk registers (supplementary sub-registers allowed); 'accept, manage, avoid' is suggestive, not mandatory; aligns with...
Climate scenario analysis (CSA) advancements: Firms must use CSA strategically for decisions; flexibility on number/type of scenarios, reverse stress/sensitivity analysis, and longer horizons...
Compliance impact
Urgency: High – Effective immediately (3 Dec 2025), requiring significant uplift to existing approaches; non-compliance risks supervisory scrutiny, as PRA expects ambitious, ongoing progress and may request evidence. Matters for capital/liquidity planning, resilience, and strategic viability amid maturing climate risk landscape.
SS5/25 is the PRA's updated supervisory statement, published on 3 December 2025, replacing SS3/19 and setting enhanced expectations for banks and insurers to manage climate-related risks through governance, risk management, scenario analysis, data quality, and disclosures. It matters because it represents a step change from awareness-raising to embedding robust, proportionate practices that integrate climate risks into core prudential processes like ICAAP, ILAAP, ORSA, and capital planning, aligning with the PRA's objectives for firm safety and soundness amid evolving physical and transition risks.
Key dates
April 2025
Consultation paper CP10/25 issued (feedback incorporated in final policy)
Within 6 months of 3 December 2025 (by ~3 June 2026)
Firms assess gaps against new expectations and develop implementation plans
3 December 2025
Publication of PS25/25 and SS5/25; replaces SS3/19 effective immediately
Suggested considerations
Conduct materiality assessment of climate risks to scope proportionality (leverage TCFD/CSRD work).
Integrate into risk frameworks: Update risk registers, ICAAP/ILAAP/ORSA/SCR with quantitative metrics, scenarios, and controls; adjust underwriting/pricing/collateral.
Perform climate scenario analysis: Model impacts on capital/liquidity/solvency using plausible pathways.
Enhance data: Source/assess granular data (e.g., location/sector/hazards), document proxies/limitations.
What changed
- Replaces SS3/19 entirely: Introduces a more mature, consolidated framework reflecting international standards (e.g., BCBS), with detailed transmission channels for climate risks across credit,...
Governance enhancements: Emphasizes board accountability, integration into business strategy, climate risk appetite statements, and linkage to Senior Managers & Certification Regime (SM&CR) without...
Risk management integration: Requires embedding climate risks into existing frameworks with quantitative metrics/limits where material; detailed mapping of risks (e.g., physical/transition via...
Scenario analysis: Firms must conduct climate scenario exercises capturing plausible pathways, impacts on capital/liquidity/solvency, with transparent assumptions and management challenge;...
Data expectations: Critical assessment of data sources/quality (e.g., geographic/sectoral for banks, hazard/vulnerability for insurers); use proxies with documented limitations.
Compliance impact
Urgency: High – Effective immediately with a 6-month window (~June 2026) for gap closure, this demands significant operational uplift (e.g., data, scenarios, integration) amid PRA's shift to enforcement; non-compliance risks supervisory action, given climate risks' materiality to prudential stability and alignment with global standards.
This statement from the Bank of England relates to a sponsored internship program focused on Black heritage, which is relevant to the banking, investment management, and wealth management sectors.
This speech from the Bank of England discusses the Financial Policy Committee's mandate and the balance between financial stability and economic growth. It covers topics related to prudential requirements, operational resilience, and ESG, which are relevant for banks, asset managers, and wealth managers.
Given at central Bank of Ireland ninth annual workshop of the ESCB research cluster 2
Why this matters
This speech by a Bank of England official discusses trade challenges, which could impact banking, investment management, and wealth management firms from a prudential, operational, and ESG perspective.
This regulatory update from the Bank of England covers topics related to Islamic finance and the Alternative Liquidity Facility, which are relevant for banking, investment management, and wealth management firms.
Given at the Group of Thirty’s 40th International Banking Seminar 2025, Washington DC
Why this matters
This speech by the Bank of England Governor covers the global economic outlook, which is relevant for banking, investment management, and wealth management firms.
Given at the Scotland Global Investment Summit 2025
Why this matters
This speech by the BoE Governor covers investment in Scotland, which is relevant to banking, investment management, and wealth management firms. The key topics discussed are likely prudential requirements, ESG, and authorization/licensing, which are important for firms operating in these sectors.
This speech by the BoE Governor discusses challenges to financial stability, covering topics such as prudential requirements, operational resilience, and ESG. It is relevant for banks, asset managers, and broker-dealers.
This speech by Sarah Breeden of the Bank of England covers topics related to prudential requirements, operational resilience, and ESG/sustainability, which are relevant for banks, asset managers, and wealth managers.
Letter to chief financial officers of selected PRA-regulated deposit-takers which provides thematic feedback from the PRA’s review of written auditor reports received in 2025 covering IFRS 9 expected credit loss accounting (ECL) and accounting for climate risk.
AI Analysis
The PRA's Dear CFO Letter, issued on 30 September 2025 by David Bailey, provides thematic feedback to selected PRA-regulated deposit-takers based on its 2025 review of auditor reports on IFRS 9 expected credit loss (ECL) accounting and climate risk integration. It matters because it highlights persistent supervisory concerns around timely credit risk recognition, model limitations, recovery assumptions, and climate impacts amid economic uncertainty, urging firms to strengthen ECL processes to ensure safety and soundness.
Key dates
2025
- Auditor reports reviewed by PRA (basis for this feedback)
30 September 2025
- PRA issues Dear CFO Letter with thematic feedback
2026
- Next round of written auditor reporting on firms' progress against areas of focus, including data aggregation and securitisation impacts; firms encouraged to self-assess now
Suggested considerations
Conduct self-assessments against annex "areas of focus" (model risk, recovery, climate) and share with auditors ahead of 2026 reporting.
Enhance PMAs: Challenge completeness for emerging risks (e.g., interest rates, sectors); link to emerging risk analysis.
Model improvements: Monitor redevelopment plans; ensure granular monitoring, comprehensive reviews, skilled independent assurance; define model boundaries.
Recovery processes: Strengthen challenges to LGD recovery assumptions for vulnerable exposures.
This is not a formal rule change or new regulation but thematic feedback building on prior years, with "areas of focus" for improvement:
Model risk: Elevated due to macroeconomic/geopolitical uncertainty; firms must enhance post-model adjustments (PMAs) for completeness (e.g., affordability risks, sector vulnerabilities), granular...
Recovery strategies: Ongoing risk of historical bias in Loss Given Default (LGD) estimates; challenge realism of recovery assumptions for vulnerable sectors/borrowers.
Climate risks: Greater emphasis on identifying/assessing/modelling climate drivers in ECL (e.g., via expert judgement, stress tests); align with PRA's SS1/23 on model risk and upcoming clarifications...
Compliance impact
Urgency: High – Persistent issues from prior years (e.g., 2024 feedback) indicate elevated model risk in uncertain conditions could lead to PRA scrutiny, auditor findings, or enforcement if unaddressed; 2026 auditor reports will benchmark progress, risking heightened supervision. Matters for prudential stability as ECL underpins capital requirements.
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