Climate Risk Consortium for small- and mid-sized banks
Introduction
On 3 December 2025, the PRA issued Policy Statement PS25/25 on climate-related financial risks, with the corresponding supervisory statement SS 5/25 immediately replacing SS 3/19.
The proposals introduce more detailed expectations across governance, risk management, scenario analysis, data & disclosure.
For CXOs of small- and medium-sized UK banks, this represents a material compliance burden. These expectations require capabilities that are often not naturally embedded within existing structures, and attempting to address them in isolation risks creating disproportionate cost, duplication of effort, and uncertainty around what will be deemed sufficient by the regulator.
This leaves leadership teams at smaller banks grappling with fundamental questions:
Where should we start?
What level of effort is proportionate?
What standards are appropriate for our suite of products, and what will the regulator consider acceptable?
What does “good” look like for an institution of our scale?
A Collective and Credible Response
To address this common problem, Katalysys is convening a consortium of small- and medium-sized banks to jointly develop a credible, practical, and proportionate framework for climate-related financial risk assessment.
The work program is designed to fully address the immediate requirements of SS 5/25 - namely a comprehensive gap analysis, board education, and a credible & ambitious remediation plan.
It does not stop there, it goes further. Until
This framework will:
Reflect the needs and constraints of small- and medium-sized firms;
Be developed with escalation channels of its features at the CFRF, and collaboration with GARP, UK Finance, and climate risk economists from Cambridge University and LSE, ensuring its alignment with thinking from such forums;
Be designed by and for institutions of similar scale, avoiding the over-engineered approaches that are typically shaped by larger firms.
By approaching this collectively, participating firms will be able to rely on a ready-made blueprint—credible because of its associations and proportionate because of its origin.
This removes ambiguity, reduces cost and effort, and enables confident compliance without unnecessary complexity.
We look forward to your participation.
Timeline and Deliverables
The program is split into two Phases, with Phase 1 running until 3 June 2026, and Phase 2 starting from 4 June 2026 and running until December 2026.
Phase 1 Work Program
We will conduct a gap analysis of your climate risk framework against SS 5/25 (covering governance, risk management, scenario analysis, data, disclosures, and ICAAP/ILAAP integration), undertake an anonymised industry diagnostic across consortium participants to identify common gaps and themes, deliver targeted training to the SMF holder and relevant Board members on SS 5/25 requirements and key remediation considerations, and develop a Joint Remediation Framework tailored to the consortium with specific relevance to your firm.
Deliverables
Bank-specific gap analysis report (confidential).
Industry diagnostic report (for all Consortium Participants).
Delivery of collective Climate Risk training (for Board members of all Participants).
Phase 2 Work Program
We will develop a proportionate Joint Remediation Framework (JRF) to address gaps identified in the industry diagnostic, including a methodology for assessing climate-related financial risk exposures, a practical data framework (leveraging public sources, reasonable assumptions, and third-party providers where needed), a refined climate scenario library (including enhanced NGFS scenarios), and a suite of climate risk metrics for monitoring and management.
We will also provide guidance on applying the JRF to your product suite, linking climate scenario outputs to ICAAP and ILAAP (including stress testing, reverse stress testing, and qualitative narrative), embedding the framework into decision-making and board reporting processes, and reflecting the outputs in your annual report and Pillar 3 disclosures.
Deliverables
Climate Risk Scenario library and relevant documentation on its use and application specific to your current suite of products.
Metrics library and relevant documentation on its use and application to your current suite of products.
Guidance documentation on the integration and interaction of JRF outputs, specific to your current suite of applicable products, to support their embedding within your ICAAP, ILAAP, Pillar 3 disclosures, and decision-making framework.
A foundational Excel-based climate risk scoring tool relevant to your current suite of products, including all relevant documentation on the tool’s use, underlying methodologies, assumptions and limitations, and data considerations.
Pricing has been standardised across all participants, with a reduced fee available for those participating in Phase 2 only. Please click the button below to learn more.