We will build on existing good work. Catalysed by the G20 and the Paris COP, the private sector has already led the development of a framework for climate financial reporting through the TCFD. 4 The TCFD has become the go-to standard for consistent, comparable and decision-useful and efficient information. It is comprehensive, encompassing recommendations on governance, strategy and risk management, as well as metrics and targets.5 And most importantly, it represents the best views of the private sector of what is decision useful, capturing the opinions of both the companies that must access finance and of the providers of capital from across the financial system. 4 The 2017 recommendations report is available at https://www.fsb-tcfd.org/publications/final-recommendations-report/. 5  The TCFD is the only reporting framework to all each of these strands for both banks and investors: https://carbonaccountingfinancials.com/files/downloads/Overview-Initiatives-Shaping-Climate-Action-Journey-for-FIs.pdf. 3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  The TCFD has widespread public backing from across the financial sector. 6 Every major systemic bank, nine of the ten top asset managers, all the credit rating agencies, all major accounting firms and shareholder advisory firms back the TCFD. In January this year, the International Business Council (IBC) of 140 CEOs published a report on a common set of metrics that IBC members signed up to, which included TCFD.7 And the UNPRI announced that all 2,275 signatories must make TCFD disclosures or risk ejection from the group. The institutions like yours will be the main users of this information.

The Bank’s stress test will build on the scenarios being developed by the Network for Greening the Financial System (NGFS) – a coalition of over 50 central banks, representing half of the world’s emissions.11 This spring, the NGFS will make these scenarios open source and publicly available, so that any company, in any sector, can use them to assess their strategic resilience. To embed climate-risk management, we’re encouraging the financial sector and our international peers to: 1. Help shape the climate stress testing framework, which Sam Woods will describe later this morning, by sharing your expertise and responding to the approach that the Bank has put forward in its discussion paper.12 2. Start building capability within your firms. Expertise in managing the physical and transition risks associated with climate change will be a core competency for banks and insurers. 3. Share knowledge and expertise. Climate risk management is a nascent field, and we all need rapidly to improve our skills. That’s why the Bank and the FCA have established the Climate Financial Risk Forum (CFRF) to publish the sector’s collective view of risk management and scenario analysis best practice.13 4. Run stress tests in other jurisdictions. Already, 15 other authorities have committed to run stress tests. Through the NGFS, the Bank of England will share our experience so that others can conduct stress tests for their own financial systems. This will help improve and refine the methodology. 10 https://www.bankofengland.co.uk/news/2019/december/boe-consults-on-proposals-for-stress-testing-the-financial-stability-implications-of-  climate-change. 11 https://www.banque-france.fr/en/financial-stability/international-role/network-greening-financial-system. 12 https://www.bankofengland.co.uk/paper/2019/biennial-exploratory-scenario-climate-change-discussion-paper.