The Bank of England could incorporate the impact of climate change in its stress tests of U.K. banks as early as 2019, the bank's governor told the Financial Times Dec. 17.
Mark Carney said he was considering whether the risks and opportunities relating to environmental issues should be part of the BoE's exploratory scenario, which the regulator introduces every two years. Under the exploratory scenario, banks cannot pass or fail and are instead required to consider if their efforts on a particular issue are sufficient, the FT said.
The BoE's Financial Policy Committee, which sets the stress test scenarios, will make the final decision on whether to include climate change.
The U.K.'s seven largest banks — Barclays PLC, Lloyds Bank PLC, HSBC Holdings PLC, Nationwide Building Society, Standard Chartered PLC, Royal Bank of Scotland Group PLC and Santander UK PLC — sailed through the BoE's 2018 stress test, the results of which were released in November.