The Bank of England (BoE) is considering making changes to capital buffer requirements for banks to cover climate change-related risks.

BoE’s Prudential Regulation Authority (PRA) noted that it will work to assess whether changes to bank capital buffer structures are required to tackle evolving challenges triggered by global warming.

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It will provide an update regarding its findings next year.

Notably, PRA first issued supervisory expectations for the management of climate-related financial risks in April 2019.

The financial institutions are expected to report how they manage risks from climate change by the end of this year.

A new PRA report said that the firms have made tangible progress against the expectations, with some materially more advanced than others.

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Next year, the authority will work to ensure that the institutions meet the expectations.

PRA CEO and Prudential Regulation deputy governor Sam Woods said: “Climate change and the transition to net-zero emissions will affect our planet, our economy and our financial system.

“As a prudential regulator, it is our job to ensure the financial institutions we regulate are prepared for these changes and able to play their part in supporting the transition.

“Our Climate Adaptation Report sets out how we are going about this, what progress firms have made, and what further work there is to do – from making climate change a core part of our supervisory approach to exploring the relevance of climate change to the regulatory capital framework.”