Is Your Board Ready to Lead on Climate Risk?

The message from regulators is loud and clear: climate-related risk must be treated with the same rigor as financial, operational, and strategic risks. That means top-down accountability, clear governance, and embedded climate considerations in your firm’s decision-making. 

The Prudential Regulation Authority (PRA) has issued Consultation Paper CP10/25, updating its expectations for how UK banks and insurers manage climate risks. This is more than a consultation—it’s a wake-up call. Climate financial risk is now a core prudential issue, not a peripheral CSR concern. 

Who Needs to Act? 

All PRA-regulated banks, building societies, investment firms, and insurers (Solvency II and non-Solvency II) are in scope. From global institutions to domestic firms—if you’re regulated by the PRA, this applies to you. 

What Should Firms Do Now? 

Firms are encouraged to respond to the consultation by 30 July. In the meantime, here are three immediate priorities your board and compliance teams should focus on: 

1. Own It at the Top 

Climate risk must be a board-level issue. The PRA expects boards to define climate risk appetite, oversee integration into strategy, and ensure regular, decision-useful reporting. Training and capability at board level are not optional—does your leadership have the tools to challenge management and lead effectively? 

How we help: We assess board readiness and provide targeted training aligned with regulatory expectations. 

2. Integrate Climate into Risk Management 

Climate risk can’t sit on the sidelines. It must be embedded across your risk framework—from credit and market risk to operations. This includes climate-specific indicators, scenario analysis, and proper documentation. 

How we help: We conduct gap analyses and help embed climate metrics and controls into your existing frameworks. 

3. Build a Culture of Accountability 

The tone from the top must echo throughout the business. Senior managers will be held accountable—under SMCR and beyond. Clear roles, responsibilities, and incentives are essential, backed by firm-wide awareness and training. 

How we help: We map roles, responsibilities, and develop training programmes to align your culture with climate expectations. 

It’s Not Just About Risk Management 

There’s increasing crossover between climate regulation and anti-fraud rules. Under the Economic Crime and Corporate Transparency Act 2023, firms could face criminal liability for ESG misstatements. Greenwashing is no longer just a reputational issue—it’s a fraud risk. 

Good governance protects your licence to operate. Strong climate risk frameworks won’t just satisfy the PRA—they’ll protect your firm from broader legal and regulatory exposure. 

The Bottom Line 

The PRA’s direction is clear: climate risk governance must improve—and fast. Firms need to: 

• Equip boards to lead on climate. 

• Embed climate in risk frameworks. 

• Avoid exposure to greenwashing and ESG fraud risks. 

This isn’t about box-ticking. It’s about resilience in a changing economy—and meeting rising regulatory expectations head-on. 

Act Now – We’re Here to Help 

Whether you’re starting a gap analysis, updating governance, or embedding risk metrics, we can support you at every step. Now is the time to act—not when the rules go live. 

Contact us at ESG@avyse.co.uk to discuss how we can help your firm lead on climate risk.