Company: BCS
Filing Date: 2025-02-13
Form Type: 20-F
Source: 0000312069-25-000114
Chunk: 376

Company: BARCLAYS PLC
Filing Date: 2025-02-13
Form: 20-F
Chunk 376
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 number of firms operating in different sectors and geographies, leading to potential downstream effects to the financial system. There is a potential direct impact on banks and other financial institutions through their operations, as well as indirectly through customers and clients. Given this context and to support the Group’s ambition to be a net zero bank by 2050, Climate Risk is a Principal Risk under Barclays’ ERMF. It manages the financial and operational risks of climate change. Physical risks, such as acute weather events (e.g. cyclones, hurricanes and floods) and long-term climate pattern shifts (e.g. droughts, temperature and precipitation levels) can lead to damage to fixed assets, operational disruptions, changes in production outputs and increased costs. The potential impacts of physical risk events on the economy may include lower GDP growth, higher unemployment, shortage of raw materials and products, supply chain disruptions. significant fluctuations in prices of assets (such as in the real estate sector) and shifting demands for goods and service. These factors could subsequently impact the business model and profitability of the Group and its clients by negatively impacting, among other things : (1) the creditworthiness of clients which may result in higher defaults, delinquencies, write-offs and impairment charges in the Group’s portfolios; (ii) the creditworthiness of the sovereigns of countries in which they occur. The deterioration in the credit ratings of sovereign bonds could affect their access to capital and their eligibility for inclusion in banks' liquidity buffers; and (iii) the value of investments which the Group holds. A transition to a low-carbon economy requires policy and regulatory changes, new national and regional commitments, new technological innovations and changes to supply and demand systems within industries. The transition to a low- carbon economy may also trigger changes in consumer behaviour and market sentiment. This gives rise to transition risks from increased costs and reduced demand for the products and services of a company including early retirement and impairment of assets, or decreased revenue and profitability. The Group's clients that are more susceptible and exposed to these changes may face operational and financial difficulties which in turn may impact their creditworthiness. In addition, climate- related legal actions or investigations may have material financial impacts on the Group's clients, customers and counterparties (particularly in high carbon sectors). This in turn can increase credit risk within group portfolios (for further details on credit risk, refer to ii) Credit Risk on page 200 ). Both physical risk and transition risk factors have the potential to trigger large, sudden and negative price adjustments where climate risk has not