David Bailey, the executive director of prudential policy at the Bank of England’s Prudential Regulation Authority (PRA), has asserted that UK banks continue to demonstrate a strong commitment to climate goals despite significant recent changes in global banking alliances focused on net zero targets. Notable banks, including HSBC and Barclays, have exited the UN-backed Net Zero Banking Alliance (NZBA), contributing to the group’s closure last month.
Bailey downplayed concerns regarding these withdrawals, stating that financial institutions remain actively engaged with the Bank of England about financial risks associated with climate change. He emphasized that their engagement is still “vibrant,” akin to previous years. This follows a trend where American banks like JP Morgan and Goldman Sachs began similar exits prior to Donald Trump’s inauguration, with some analysts suggesting these moves were in response to political pressures in the U.S.
The NZBA, affected by the departures of major banks, initiated a review before announcing its closure. Despite this, Bailey indicated that the Bank of England is vigilant in monitoring climate-related financial risks and is open to conducting additional stress tests to assess the resilience of banks against potential climate crises.
While recognizing the importance of climate risk, Bailey also noted the necessity of balancing these concerns with other emerging threats, such as the risks associated with private credit—a less regulated segment of the financial sector. He acknowledged the difficulty of focusing solely on climate risk in light of other financial considerations.
The PRA has been recognized for pioneering climate preparedness testing in the financial sector since 2021, although it faced criticism for not implementing specific capital requirements to protect against climate-related losses. Meanwhile, Bailey is seen as a frontrunner to lead the PRA following the upcoming departure of its current head, Sam Woods. The Bank is also advancing banking reforms aimed at easing regulations for smaller lenders, thereby fostering competition in the sector.
Source: https://www.theguardian.com/business/2025/nov/09/uk-banks-still-committed-to-climate-goals-bank-of-england-executive-insists