Show don’t tell: BoE’s climate stress test dilemma

Making the test easier to run could come at the expense of building risk management capacity

As Mark Carney prepared to take up new roles at the start of 2020 – advising both the UK government and the United Nations on climate change – he had already moved to secure his legacy at the Bank of England. In December last year, the BoE announced that the topic of climate change will also be included in its 2021 bank and insurance stress tests.

The bank element of the test, to be run as the Prudential Regulation Authority’s (PRA) next biennial exploratory scenario (BES), has already