On 3 December 2025, the Bank of England’s Prudential Regulation Authority (PRA)
replaced its decade-old climate guidance with something far more demanding.
Supervisory Statement 5/25 gives banks just six months to complete an internal review
of how they manage climate-related risk.
For relationship managers and sustainability teams, that deadline changes the
conversation with SME customers overnight. This is no longer a reporting exercise. It’s a
test of whether banks can actually see the risk sitting inside their portfolios.
What SS5/25 Actually Requires
According to the Bank of England, SS5/25 sets out updated expectations across
governance, risk management, scenario analysis, data and disclosure — with
dedicated chapters for banking-specific issues like credit risk and financial reporting.
The headline changes banks need to prepare for:
• Board-level ownership — boards must understand and sign off on material
climate risks, not just receive a summary
• Client and counterparty assessment — banks must assess transition risk
exposure at the level of individual relationships, not just sector averages
• Proportionate but real action — smaller exposures allow simpler tools, but
every firm must show its methodology and evidence its judgements
• Data gap remediation — where reliable data doesn’t exist, firms need
documented proxies and a credible plan to close the gap
That last point is where most banks will struggle. The regulation assumes banks can
assess client-level transition risk. Most can’t — because their SME customers aren’t
publishing structured data in the first place.
The Data Blind Spot Behind the Deadline
This is the same gap the PRA has flagged repeatedly since SS3/19: banks are being
asked to quantify risk they cannot currently see. SME customers don’t report emissions
or transition plans in a comparable format, and the manual surveys banks rely on go
stale within months.
Six months isn’t long enough to build that capability from scratch. It is long enough to
plug into infrastructure that already exists.
This is the gap the Climate Action platform, developed and deployed by NatWest and
National Australia Bank, was built to close. Built on TDH’s underlying sustainability
intelligence, it gives relationship managers a structured view of customer transition risk
— the same view SS5/25 now expects banks to evidence at board level.
What This Means for Banking Teams
The six-month internal review clock is running. Banks that wait to build data capability
from the ground up risk missing the July milestone entirely.
The banks best placed to meet SS5/25 won’t be the ones with the most spreadsheets.
They’ll be the ones already routing sustainability intelligence into every customer
conversation — turning a compliance deadline into a relationship-deepening
opportunity, including access to preferential lending rates for customers who can
demonstrate progress.
Talk to Our Team
Want to see how the Climate Action platform maps directly to SS5/25’s client
assessment expectations? Get in touch with our team for a walkthrough.
