The financial regulators have set up four working groups intended to address the financial risks from climate change, with feedback to be shared on an industry-wide basis.
The Financial Conduct Authority and Prudential Regulation Authority created the working groups at the first meeting of the Climate Financial Risk Forum last Friday (March 8), aligning them to four focus areas: risk management, scenario analysis, disclosure, and innovation.
The forum was set up to share best practice across financial regulators and the industry to address the financial risks associated with climate change and support innovation for financial products and services in "green finance".
The forum meets three times a year with membership formed from banks, insurers and asset managers, including Schroders, Standard Life Aberdeen and Aviva.
Each of the sub-working groups will be chaired by a member of the forum, meeting regularly and reporting back to the wider forum at each triannual meeting.
The groups aim to produce practical guidance for the wider industry and membership will be wider than that of the forum, including academics and industry figures.
Andrew Bailey, chief executive of the FCA, said climate change posed a "major threat" to the future stability of the financial system.
He said: "The FCA and PRA have been working closely together, combining and building on our joint knowledge, to develop an approach which will enhance the UK financial system’s resilience to climate change.
"The Climate Financial Risk Forum will seek to encourage approaches in the financial sector, managing the financial risks from climate change as well as supporting innovation in green finance."
Sam Woods, deputy governor and chief executive of the PRA, said: "The challenge we face in mitigating the risks created by climate change is unprecedented, and we need to begin to act now if we are to ensure an orderly transition to a low-carbon economy.
"The establishment of the Climate Financial Risk Forum will provide a platform through which the PRA, FCA and industry can share experience and build expertise as we begin this work."