A Bank of England executive has drawn a clear line between regulatory duty and voluntary alliances, insisting that UK banks are still focused on climate goals despite the end of the Net Zero Banking Alliance (NZBA).
David Bailey of the PRA stated that the regulator’s primary focus is on the “financial risks arising from climate change,” not on which groups banks belong to. His comments followed the closure of the UN-backed NZBA after major members, including Barclays and HSBC, departed.
The collapse of the alliance has been seen as a significant setback for coordinated global action on climate change. The departures started in the US, but the exit of major UK lenders cemented the group’s inability to continue.
Bailey, however, described the ongoing climate-related discussions between the regulator and the banks as “vibrant.” He confirmed the PRA continues to monitor risks and may conduct further stress tests to gauge the sector’s preparedness for climate-related disasters.
This work must be balanced against other threats, Bailey noted, such as the rapid, unregulated growth of the private credit industry. The PRA’s focus remains on practical risk management, even as it faces criticism for not implementing tougher climate-related capital requirements.