HSBC hosts private talks with UK banks over climate-risk disclosures

HSBC has hosted a closed-door gathering with elder figures from large UK banks arsenic regulators and investors intensify calls for clearer reporting connected climate-related risks wrong lenders’ indebtedness portfolios, the Financial Times reported citing unnamed sources.

The study said representatives from HSBC, Barclays, Santander, NatWest and Lloyds gathered astatine HSBC’s Canary Wharf offices past week to sermon however to conscionable stricter expectations astir fiscal disclosures.

Three radical acquainted with the discussions told the FT that the talks focused connected compliance with tougher reporting standards.

Several investors besides attended, on with the Institute of Chartered Accountants successful England and Wales.

The ICAEW confirmed it was contiguous but did not remark further, the FT said.

The meeting, involving accounting and hazard specialists from the banks, took spot earlier HSBC’s yearly wide meeting, astatine which the lender defended its determination to loosen limits connected financing fossil-fuel businesses.

Central banks person repeatedly cautioned that climate-related events specified arsenic flooding, wildfires and sea-level emergence could pb to much defaults by households and companies.

Wider economical changes, including elevated ostentation and involvement rates, whitethorn besides trim banks’ capableness to withstand specified losses.

UK banks and insurers person until adjacent period to reappraisal whether they conscionable revised climate-risk supervisory standards issued past twelvemonth by the Prudential Regulation Authority (PRA).

Under those requirements, banks indispensable much intelligibly bespeak clime hazard successful fiscal statements done “expected recognition losses”, the accounting measurement utilized to estimation apt losses erstwhile borrowers neglect to repay.

In 2024, PRA enforcement manager David Bailey warned CFOs astatine starring UK banks astir shortcomings successful the mode lenders were identifying borrowers and sectors astir exposed to climate-related risks.

He besides pointed to banks’ decisions not to study immoderate worldly “post-model adjustments” related to clime risk.

Some investors, including UK plus manager Sarasin, Denmark’s AkademikerPension and UK workplace pension strategy Nest, person written to the Financial Reporting Council asking it to analyse whether HSBC’s accounts and PwC’s audit understated clime risks that were financially important to the bank.

Banks crossed the UK and EU person begun disclosing specified risks, though the level of item varies.

ING said successful its latest accounts that the International Financial Reporting Standard for expected recognition losses did not afloat bespeak immoderate of the “novel” risks created by clime change. The slope made a discretionary accommodation of €47mn to expected recognition losses.