The Bank of England will be the first regulator to stress test its financial system against various "climate pathways," according to central bank Governor Mark Carney.
Such climate pathways will include the "catastrophic business as usual scenario" and the transition to net zero carbon emissions by 2050, Carney said in a speech in Tokyo. As part of the test, Carney said banks will be required to disclose how their borrowers manage current and future climate-related risks and opportunities.
The test is aimed at making the global financial system more responsive to changes in climate and to the government's climate policies, Carney noted.
Carney previously said the BoE could incorporate the impact of climate change in its stress tests of U.K. banks as early as this year.
