July 2020: CISL Research dissertation -Taskforce on Climate-related Financial Disclosures: Using geospatial data at UK banks to analyse flood risks associated with retail mortgage portfolios in London

Abstract (for full research dissertation please email seawolfsustain@gmail.com)

All large UK banks have signed up to complete the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This commitment includes seeking an understanding and analysis of their physical climate risks, such as flooding. Internal business processes and external disclosure of the flood risks associated with retail mortgage portfolios at UK banks are at an early stage; data requirements, barriers, challenges and potential unintended consequences are not yet fully understood. This qualitative research paper examines how UK banks can use geospatial data to analyse the flood risks associated with their retail mortgage portfolios in London. It includes a review of current TCFD disclosure practices at UK banks and identifies flood risk business processes, plus associated barriers and challenges. Relevant capabilities of GIS will be assessed to see how they can support flood risk analysis. The awareness at UK banks of the unintended consequences related to the use of GIS for this purpose will also be investigated. Climate risk managers and flood risk experts have been interviewed for this paper. The interviews and literature review that reveal TCFD and flood risk analysis is still in its infancy at UK banks. Although 70% of the subjects interviewed are working on climate-related scenario analysis, only 23% expect to disclose this information externally within the next two years. This paper adds to existing academic literature by adding a bank lens to the topic of flood risk management. Practical recommendations will be set out for those implementing TCFD disclosures UK banks’ and considering the use of GIS for flood risk analysis.