Climate change moves up the regulatory agenda for financial services

Supervisory Statement SS 3/19, first published by the Prudential Regulation Authority (PRA) in 2019, sets out expectations for how UK banks, building societies and insurers should manage the financial risks from climate change. It covers governance arrangements, risk management practices, scenario analysis, and disclosure requirements, and reflects the PRA’s approach to embedding climate risk in the financial system.

In April 2025, the PRA issued a significant update, signalling a clear shift from expectation to enforcement. Climate risk is no longer a distant concern for financial institutions—it is a supervisory priority and an integral part of business strategy, decision-making and sustainability planning. Mortgage lenders must now take immediate steps to review and evidence how they are addressing climate-related financial risks across their operations.

With the consultation period closing on 30 July 2025 and revised expectations taking effect immediately thereafter, firms have just a few months left to align. For UK banks and building societies, this means moving fast and implementing effective solutions to ensure compliance with the PRA’s expectations.

What’s changed in the latest SS 3/19 update

The PRA’s updated SS 3/19 introduces more stringent supervisory expectations and a firmer supervisory stance:

• Firms must review lending strategies, business models, risk mitigation and risk appetite frameworks and policies in the context of climate change related risk.

• Any gaps must be clearly identified, with evidence provided of actions taken to address them, and outputs documented for supervisory review.

• Documentation and reporting are no longer optional. Quantitative and qualitative tools and metrics must be used to monitor exposure to climate risks.

The PRA’s expectations align with the broader regulatory landscape and international standards. This includes embedding climate considerations into ORSA (Own Risk and Solvency Assessment), ICAAP (Internal Capital Adequacy Assessment Process), and disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD). Overall, these enhancements place clear emphasis on governance frameworks, scenario analysis, data quality and integration, and the need to embed climate considerations into day-to-day risk management processes and risk appetite decisions.

What the update of the PRA’s Supervisory Statement means for banks and building societies

For financial services providers, including lenders, banks and building societies, the implications are significant:

• There will be increased scrutiny on real estate lending portfolios, especially with regard to physical risks related to climate change such as flooding, subsidence, fire, and coastal erosion.

• Firms must move from general climate awareness to specific, measurable assessments of their climate risk exposure, aligned with international standards such as TCFD and ORSA.

• Senior management must demonstrate ownership of climate risk management and align practices with the firm’s overall business strategy and capital requirements.

• Lenders must integrate climate risks into underwriting, credit risk assessment, pricing, and portfolio monitoring.

• This requires a solid foundation of accurate, property-level data to evaluate environmental performance, EPC ratings, and sustainability risks.

How financial services providers can better integrate climate change into their risk management practices

PriceHubble supports UK lenders in meeting the new SS 3/19 regulatory requirements. By bringing together more than 200 high-quality, regularly updated datasets—proprietary, private and public—into one powerful platform, we provide extensive climate risk, environmental, and property data solutions designed for integration into risk management practices, internal capital adequacy assessment processes (ICAAP), and reporting outputs.

Our solutions provide:

• Property-level climate and environmental risk scores (including flood, subsidence, fire risk and more)

• Property-level data, such as EPC data and building characteristics (including unsafe cladding data), to support energy transition planning and ESG metrics

• Automated insights to help underwriters, risk managers, and portfolio analysts make informed decisions aligned with risk appetite

"For UK lenders, the pressure is now on to turn climate policy into action," says Mark Cunningham, Managing Director of PriceHubble UK. "The key to doing this credibly is data. We equip banks, building societies, and financial services providers with the granular insights they need to understand and manage exposure at scale".

Embedding data into risk management frameworks to accelerate compliance

PriceHubble partners with analytics firms such as MIAC Analytics to ensure that data can be fully embedded into client models, risk management frameworks, and reporting tools. This enables end-to-end support across credit, climate, portfolio, and financial risk.

"Integrating climate risk data into lending decisions is no longer optional," says David Pickles, Managing Director of MIAC Analytics. "Working with PriceHubble allows us to provide stakeholders with a powerful toolkit to meet emerging regulatory and risk management requirements."

Learn more about our partnership with MIAC Analytics

Building a resilient, regulated future

The PRA is clear: UK banks and building societies must take climate risk seriously and be able to demonstrate their work. Compliance with the updated SS 3/19 is not simply a box-ticking exercise—it requires a strategic approach to climate risk management that aligns with evolving regulatory requirements, international standards, and long-term business strategies.

Incorporating sustainability, ESG principles, and climate metrics into business models and financial reporting is now essential. As firms prepare for supervisory reviews in 2026, those who act early will be best placed to strengthen their risk appetite frameworks, demonstrate good governance, and support the UK’s broader net-zero transition. By doing so, they can improve portfolio resilience, meet capital requirements, and deliver value to stakeholders.

With the right data, tools and partnerships, it's possible to meet expectations, strengthen governance, and build more resilient lending strategies.

PriceHubble is here to help. Want to learn more? Contact our team to discuss how we can support your climate risk and compliance journey.