After a string of senior departures from the Bank of England, climate and nature risk is reportedly being deprioritised at the top levels of UK financial oversight.
But the risks, and expectations, aren’t going away.

Recent Financial Times reporting suggests that under Governor Bailey’s leadership, climate risk work at the Bank has lost momentum. Internal modelling capacity has shrunk. Key staff working on climate stress tests and nature-related financial risk have moved on. And that leaves a regulatory vacuum, one that banks, insurers, and investors must now navigate largely on their own.

Here’s what this means for financial institutions:

Regulatory Vacuum: The burden shifts to banks

With the Bank of England downplaying its internal climate risk modelling efforts, the spotlight turns to individual banks and insurers. Institutions can no longer rely on the Bank to set the pace or provide detailed guidance. The expectation from regulators and stakeholders remains clear: firms must demonstrate robust ESG risk frameworks and credible data infrastructures.

If anything, this vacuum increases market and reputational risk. Investors, counterparties, and global regulators will judge UK financial players against international best practice, not just domestic regulatory signals.

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Supervisory Pressure Is Still Rising

While strategic direction may be wavering at the top of the Bank, operational supervision is not standing still. The BoE’s Prudential Regulation Authority (PRA) has already flagged significant gaps in how firms are managing physical and transition risks across their portfolios.

This is a clear signal: even if macro-level leadership on climate is stalling, supervisory expectations on risk management are tightening. Firms that treat this as a compliance checkbox will likely fall behind.

Opportunity to Lead, Not Follow

Firms that build granular, verifiable ESG data systems, and integrate climate and nature risk into core risk management, will be best positioned not only to meet evolving standards, but to outperform peers:

• Access to differentiated capital (as sustainable finance scales)
• Lower financing costs through superior risk signalling
• Enhanced brand trust and credibility in a scrutinised market

In this context, robust ESG and climate risk infrastructure isn’t optional. It’s a strategic enabler.

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How Tese.io Can Help

We help banks and financial institutions build future-proof ESG data architecture:

• Granular, verifiable ESG and nature-related data collection at SME and portfolio level
• Scenario-ready ESG and risk dashboards to support internal governance and regulatory reporting
• Integrated sustainable finance tools, helping FIs scale green lending and avoid greenwashing

In short: we give you the systems to manage what regulators may stop modelling, but markets will not stop pricing.

If your institution is ready to lead on climate risk, rather than wait for others to catch up, get in touch with us today.