changes in policies, technologies and physical risks will prompt a reassessment of the value of a large range of assets as new costs and opportunities become apparent. the longer meaningful adjustment is delayed, the more transition risks will rise. where credible policy frameworks are in place ( and when firms disclose the risks accordingly ), the market will allocate capital to deliver the necessary innovation and growth and pull forward the adjustment to a carbon - neutral future. the bank of england is overhauling its supervisory approach in anticipation of these major shifts. earlier this year the pra published a supervisory statement that sets out our expectations for banks and insurers regarding their governance, risk management, scenario analysis and disclosure of climate - related carney, m. ( sept 2015 ). breaking the tragedy of the horizon, speech at lloyd ’ s of london. recommendations of the task force on clmate - related financial disclosures ( june 2017 ) available at : https : / / www. fsb - tcfd. org / wpcontent / uploads / 2017 / 06 / final - 2017 - tcfd - report - 11052018. pdf. not surprisingly, the supply of disclosure is responding. 785 organisations, with a total market capitalisation of us $ 9 trillion, have endorsed the tcfd recommendations since 2017. full list of current tcfd supporters available at : https : / / www. fsb - tcfd. org / tcfdsupporters /. task force on climate - related financial disclosures : status report ( june 2019 ) available at : https : / / www. fsb - tcfd. org / wpcontent / uploads / 2019 / 06 / 2019 - tcfd - status - report - final - 053119. pdf. all speeches are available online at www. bankofengland. co. uk / news / speeches financial risks. 33 and to support the capacity building and the development of best practice, the pra and the fca established the climate financial risk forum to work with firms from across the financial system. 34 and today the bank is going much further. the fpc and the prc are announcing that they will stress test the uk financial system for resilience against different climate pathways. the design of this stress test will start in the autumn, and the tests will be completed in 2021. the stress test will reveal the uk financial system ’ s ability to withstand the

investment in the productive uk real economy, assuming suitable additional supply. the reforms to investment flexibility, reporting and approval processes are not without risks. in the case of annuity firms, the reforms are reliant on our confidence in the level of ma benefit taken – and hence on the fundamental spread being appropriately calculated. more broadly, in addition to the use of safeguards where appropriate, the reforms are contingent on the continued effectiveness of a central pillar of the solvency ii regime, the quality of firms ’ own risk management. that will remain at the core of firm - to - supervisor dialogue and engagement. our overall work on potential solvency ii reform has already benefited from the effective engagement as part of the pre - consultation phase of the review. following the publication of our dp at the end of april, we are requesting more information from firms and i am looking forward to our next series of meetings in order to hear the views of firms, their investors and other stakeholders. thank you. i am grateful to saoirse carberry, craig turnbull, alan sheppard, avni gangadia and miranda hewkin smith for their assistance in helping me prepare this speech. 1. review of solvency ii : call for evidence | hm treasury 2. brave new world - speech by sam woods | bank of england. 3. four rs : creating the conditions for long - term sustainable growth in the life annuity sector – speech by charlotte gerken | bank of england 4. the prudential regulation authority ’ s approach to insurance supervision | bank of england section 1 explains the pra ’ s objectives. 5. at ye21 ‘ investment and cash excluding participations ’ - insurance aggregate data report | bank of england, 6. financial stability report august 2020 | bank of england 7. dp2 / 22 – potential reforms to risk margin and matching adjustment within solvency ii | bank of england 8. review of solvency ii : 2022 data collection exercise ( dce ) | bank of england 9. review of solvency ii : consultation | hm treasury 10. ss20 / 16 - solvency ii : reinsurance - counterparty credit risk | bank of england