Company: BCS
Filing Date: 2025-02-13
Form Type: 20-F
Source: 0000312069-25-000114
Chunk: 115

Company: BARCLAYS PLC
Filing Date: 2025-02-13
Form: 20-F
Chunk 115
---
D Strategy Recommendation B

Scenario analysis Climate scenario analysis forms a key part of Barclays' approach to assessing and quantifying the impact of physical and transition climate risks on the Bank's portfolios&sup1;. We use this to better understand the significant uncertainty that arises from how climatic weather patterns will change, as well as the rapidly evolving nature of the climate transition from government policies, new technologies and changing individuals' sentiment. Through climate scenario analysis, these risks and uncertainties can be translated into financial impacts to the Bank, allowing Barclays to better understand the resilience of its business strategy. The scenarios explored in this section are under a stressed pathway. Barclays uses climate scenario analysis primarily for (1) understanding Barclays&#8217; resilience to climate scenarios, (2) as a consideration within its financial planning process, (3) assessing the financial impacts from Barclays meeting its sectoral BlueTrackTM targets consistent with limiting the increase in global temperatures to 1.5&deg;C, and (4) as a consideration within its assessment of Expected Credit Losses reported under IFRS 9. More detail on the use of BlueTrackTM targets and the Expected Credit Losses uses can be found on pages 44 and 251, respectively. History and evolution Since 2018, Barclays has progressively developed its internal scenario analysis capabilities, developing new climate assessment methodologies, running internal targeted exercises with external subject matter experts, and participating in regulatory climate stress-testing. In the 2024 Internal Stress Test, a single scenario was designed to assess Barclays' financial resiliency to both climate and traditional macroeconomic risk&#8211; and the extent to which Barclays would remain within risk appetite. This was an enhancement to 2023 where climate was an add-on to the Internal Stress Test. To further explore climate risks, a Reverse Stress Test was run to assess climate risks over a longer-term time horizon (2040). Finally, a Nature Stress Test was executed to assess the resilience and vulnerabilities of Barclays Europe to environmental shocks. Barclays continues to build its use of scenario analysis to explore and further understand the evolving landscape &#8211; identifying areas of risks and opportunities &#8211; to challenge existing assumptions of future climate pathways and measure the risks that climate change poses to the Bank. Note: 1 Informed by the Basel Committee on Banking Supervision's 2021 'Climate-related financial risks - measurement methodologies' report, Barclays considers climate scenario analysis as forward- looking projections of climate risk outcomes, with climate stress- testing a subset of this where the exercise is designed to