Company: BCS
Filing Date: 2025-02-13
Form Type: 20-F
Source: 0000312069-25-000114
Chunk: 124

Company: BARCLAYS PLC
Filing Date: 2025-02-13
Form: 20-F
Chunk 124
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 on sales on beef, lamb and dairy in line with the UK Standard VAT rate. For physical risk, the likelihood of drought was assessed on a broader population. Challenges and limitations Barclays is continuing to bettering its understanding of the interlinking relationships between climate, particularly transition risk, and macro variables. A lack of adequate historical data being a key limitation to progress. Data There are inherent challenges in climate modelling due to limitations in data quality and availability, given the short history of climate assessments within the financial services industry. &#8226; Data coverage is often lacking, where a subset of assets may not have the appropriate information publicly disclosed. Climate scenario risk analysis requires approaches and tools that are more granular (e.g. focus on company-level analysis), which differs from more traditional stress-testing exercises conducted at portfolio or sector level. This creates a need for more granular data. &#8226; While high data granularity is desirable to model client specific features, the balances between high data granularity and the additional insights provided must be investigated to assess the appropriate level of modelling &#8226; Data coherence issues may present inconsistencies in modelling. Emissions data is often one-year lagged, thus where the latest quarter/year financials are available, the emissions data may not be reflective of the company's operations, especially where there has been substantial growth or decline, mergers and acquisitions or other special activities. Scenario There are inherent uncertainties with scenario design largely attributed to limited history of the interactions between climate risks and the economy. &#8226; Timing and interactions of physical and transition risks can impact the Bank's assessment of capital adequacy and resilience. Assumptions around such compounding effects, while nuanced, are critical to our loss assessment and subsequently risk management processes and business strategy &#8226; There is a significant level of uncertainty with climate stress-testing projections in (i) how the scenario will manifest; (ii) how customers and clients will react; and (iii) the final loss quantification &#8226; An understanding of compounding risks and feedback loops between financial systems, the economy, and climate risks remains a challenge, given the lack of historical precedent of such interactions. Over longer time horizons, it becomes increasingly difficult to capture the range of second-order effects as physical and transition risks evolve, assess the rate in which risks manifest or subside, or identify inflection points. &#8226; The Nature scenario and outcomes are more uncertain than climate-equivalents, in part driven by the absence of publicly available scenarios, such as the IEA or NG