Climate Risk Monthly — May 2025
Global Association of Risk Professionals (GARP)
The world's leading association for risk professionals.
Welcome back to Climate Risk Monthly. The past month brought several contrasting news stories to the world of climate risk.
On one side, the U.K. proposed new rules to strengthen climate risk management in the financial industry, and scientists published a new means of attributing climate-related damages to specific oil companies.
On the other side, the U.S. advocated to weaken the international climate standards being worked on by the Basel Committee for Banking Supervision and continued its efforts to undermine the legal basis for holding oil companies liable for climate-related damages.
More on these and other stories below!
The Climate Risk Mini-Quiz
Think you know all the ins and outs of climate risk? Test your knowledge with this short quiz on topics from our Sustainability & Climate Risk (SCR®) Program curriculum!
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This month’s mini quiz focuses on climate risk measurement and management. Good luck and let us know how you do in the comments below!
Upcoming GARP Events
Climate Risk Webcast | June 24
GARP 2025 Climate & Nature Risk Symposium | June 3-4
Recent GARP Content
Climate Risk Webcast | May 22
Climate Risk Podcast | May 8
GARP Whitepaper | May 6
May 2025 News Digest
Scientists Tally Oil Majors’ Climate Damage With Eye to Legal Liability | Bloomberg
An Effort to Kill Off Lawsuits Against Oil Giants Is Gaining Steam | The New York Times
Over the past several years, increasing numbers of high-profile lawsuits have been levelled against oil companies to hold them accountable for damages resulting from climate change. An important component of this trend is the increasing sophistication of what is known as "attribution science": the practice of attributing specific damages from climate change to individual polluters. A new method of calculating these damages was recently published in the scientific journal Nature, and its authors are advocating for its use in support of laws and lawsuits being leveraged against oil companies.
In the U.S., however, many of these laws and lawsuits face significant headwinds. The Trump administration has denounced them as politically motivated and a threat to national security and moreover has levelled countersuits against four states to halt their efforts. Advocates for the efforts also worry that oil companies could lobby successfully for federal immunity provisions, similar to those provided to gun manufacturers that shield them from liability when their guns are used to commit crimes.
There are currently around three dozen of these lawsuits pending against oil companies, none of which have yet gone to trial. Whether their merits will be justified in court remains to be seen.
Key Points:
According to the new attribution science method, the greenhouse gas emissions of the 111 companies analyzed cost the world USD 28 trillion between 1991 and 2020.
Attribution science is likely to be used both in support of lawsuits and to calculate the distribution of fines levelled against oil companies under state “climate Superfund” laws.
The U.S. federal government has so far sued four states to halt their efforts to recover damages from oil companies, and additional protections, such as immunity provisions, could be forthcoming.
Click here to read the Bloomberg article and here to read the New York Times article.
Basel Committee Resists U.S. Pressure to Downplay Climate Risk | Bloomberg
Despite pressure from the U.S., climate risk remains a priority for international financial regulators. The Basel Committee on Banking Supervision — a global oversight body tasked with defining international standards for banking regulation — has announced it will proceed with its climate risk work via its Task Force on Climate-Related Financial Risks (TCFR), including efforts to publish a framework for quantitative climate disclosures. The U.S. Federal Reserve had advocated for the TCFR to be disbanded and climate risk relegated to a lower-priority working group, but this proposal was rejected by the central banks and supervisors making up the Basel Committee. This indicates that, for now, the Basel Committee is more aligned with the approach championed by the European Central Bank than with that taken by the Federal Reserve.
The Federal Reserve’s position has for years been that central banks should only play a limited role in combatting climate risk, and the U.S. has succeeded in weakening the Basel Committee’s climate risk measures multiple times in recent years. Proposals to use climate risk measures as a factor in banks’ capital rules have been halted, and the Basel Committee has agreed that their climate-related disclosure rules can be voluntarily adopted or ignored by jurisdictions. The TCFR has survived intact for now, but the impact of its work and its long-term future remain in question.
Key Points:
The Basel Committee on Banking Supervision voted against dissolving its Task Force on Climate-Related Financial Risks (TCFR) — a move proposed by the U.S.
The U.S. has for the past several years advocated for the Basel Committee to limit the scope of its work on climate risk, halting proposals to incorporate climate risk into capital rules and making climate disclosures voluntary.
The U.S. has yet to adopt the Basel 3 capital standards created in response to the 2008 financial crisis, and it’s possible the TCFR’s future may be used as a bargaining chip in getting the U.S. to align with Basel 3.
Click here to read the full article.
Bank of England Proposes Stronger Climate Risk Rules for Banks and Insurers | Bank of England
The Bank of England’s Prudential Regulation Authority (PRA) has released a new consultation paper proposing tougher standards for how banks and insurers identify, assess, and manage climate-related financial risks.
The move reflects growing concern that firms are still not meeting regulatory expectations, with the PRA warning that “progress is uneven and more needs to be done.” At the same time, the regulator acknowledged that its previous guidance may have lacked clarity, especially given the “significant uncertainty about the source and magnitude of risks” posed by climate change.
If adopted, the new rules would require firms to develop more structured, forward-looking approaches to climate risk, setting clear metrics, defining risk appetites, and embedding these considerations directly into their core risk management systems, rather than treating them as an add-on. It’s part of a broader effort to ensure the U.K. financial system remains resilient as the physical and transition risks of climate change become increasingly material.
The consultation is open until July 2025, after which the PRA plans to finalize and implement the updated expectations.
Key Points:
The PRA is seeking to sharpen and clarify its expectations on climate risk management, requiring more structured and integrated approaches from banks and insurers.
It warns that progress to date has been inconsistent and calls for climate risk to be fully embedded within firms’ core risk frameworks.
Firms will need to adopt forward-looking strategies — including quantitative metrics and risk appetites — once the rules are finalized post-consultation in July 2025.
Click here to read the full consultation paper.
Other Noteworthy Articles
Photo of the Month
Each month, we will select a reader-submitted photo to highlight in our next newsletter. If you’d like to participate, please send your photo to climaterisknewsletter@garp.org, along with your name and where the photo was taken.
Head of Risk Management at Croatian Tax Administration
3mo💡 Great insight