Giovanni Covi, James Brookes and Charumathi Raja
Climate transition will undoubtedly expose UK banks to new risks and opportunities. Hence, we quantify the UK banking sector’s share of total assets allocated towards climate policy relevant sectors (CPRS). Using The Global Network data set mapping the network of UK banks’ loan and security exposures, we find that the UK banking system's direct CPRS exposures amount up to 6.1% of total assets, or 45.7% of non-financial corporate (NFC) exposures. When considering also indirect CPRS exposures towards other financial corporates, the share of total assets subject to CPRS classification increases up to 10%. While 83% of these assets are tied up in carbon-intensive sectors, 17% will likely benefit from climate transition plans. We do not measure exposures subject to climate-related physical risks.
