new tides − speech by nathanael benjamin given at uk finance published on 20 july 2022 investment banks have operated in easy economic conditions over the last decade. but now they face challenges, caused by geopolitical and macroeconomic changes, new technology, and climate change. nat benjamin says these banks must act now to prepare for those risks. speech good morning everyone. thank you for the introduction, and thanks to uk finance for inviting me to speak today. as those of you who are keen swimmers will know, there is a big difference between a visit to the local pool and swimming in open waters. the pool is predictable and safe. you know where you are going. there are no currents. there is no surf. it is usually not too deep, you can often touch the ground easily. and the water is ( generally ) kept at a comfortable temperature. performing in this environment is easy. conditions in the last decade, including at times supported by major government stimulus, have resulted in a benign environment for investment banks to do business in. many reported record earnings [ 1 ] last year. in such waters, it would be easy to be complacent and kid yourself that you are a good enough swimmer to take on the open ocean. that would, of course, be very dangerous. in january, my colleague rebecca jackson and i wrote to chief executive officers of international banks operating in the uk to outline the pra's priorities for the year ahead. [ 2 ] whilst waters were calmer at that time, we could see waves on the horizon. we warned that future cyclical and structural changes could materially threaten profitability and sustainability of certain business models. in the months since we sent that letter, events have unfolded – and indeed a war broke out – that now make this is all feel more present and real. geopolitical and macroeconomic uncertainty is translating into market volatility. meanwhile, digitalisation continues at pace, as new technologies, products and partners enter the financial services ecosystem. and the risks from climate change loom and threaten to change the very nature of the environment banks operate in. these are all key features of a new world facing investment banks. like anyone preparing for an open water swim, if investment banks are to perform in these uncharted waters, they will need to challenge themselves on their true capabilities, be forward - looking, anticipate changing conditions, and prepare to encounter unexpected currents along the way. this will be a real test of their

. co. uk / publications / pages / speeches / default. aspx of course, given the uncertainties around climate, not everyone will agree on the timing or the scale of adjustments required to achieve this goal. but the right information will allow optimists and pessimists, sceptics and evangelists, to back their convictions with their capital. the main obstacle standing in the way of a smooth and timely market - led adjustment has been the absence of quality information on climate - related financial risks and opportunities. as the task force has highlighted, a significant number of climate - disclosure regimes – indeed on some counts around 400 – already exist. but existing schemes vary in their status, coverage and ambition. for example, while 80 % of fortune 500 companies participate in one of the existing schemes, it remains the case that only around a third of the top 1, 000 us companies produce broadly comparable information on the climate - related financial risks they face. the task force ’ s report – presented to you today – shows the way forward. let me highlight some of its recommendations that will make a major contribution. the first breakthrough is a disclosure framework that it sufficiently comprehensive for use by all publicly - listed companies, whatever their sector, across the full set of climate - related financial risks they face. the recommendations are designed to leverage, rather than replace, existing disclosure regimes. so the task force has set out how firms can comply more effectively with existing disclosure obligations, by disclosing their climate - related financial risks and opportunities in their mainstream financial reports. in turn, this should ensure that consideration of climate - related financial risk, and opportunities, is properly embedded within, and subject to, firms ’ corporate governance and risk management. reporting on these risks cannot remain a niche activity. decision - useful, actionable information the disclosure recommendations deliver actionable information that will be useful in decision making. in particular, they focus on four areas critical to how real - world businesses operate : governance, strategy, risk management, and metrics. see oecd ( 2015 ), “ climate change disclosure in g20 countries ”. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx the expectation is that qualitative and narrative disclosures will be complemented with quantitative ones as is the case for other disclosures made in financial statements. these are grouped into the categories of revenues, expenditures, assets and liabilities and