The Bank of England could force board-level bank bosses to manage climate change risks as part of new rules being floated by its regulatory arm.

The Bank’s supervisory Prudential Regulation Authority (PRA) has launched a consultation paper outlining how UK insurers, banks, building societies and investment firms must take a more hands-on approach to evaluating the costs of environmental change.

It includes requirements around scenario planning and financial risk disclosures as well as corporate governance, stressing that there should be “clear board-level engagement” on climate change risk planning.

“The PRA would also expect that the board and its subcommittees have clear responsibilities for managing the financial risks from climate change, including individual responsibilities for the relevant existing senior management function,” the regulator said.

The proposals are meant to force financial firms into crafting business strategies which would manage “far-reaching and foreseeable risks” of climate change.

The consultation paper comes just weeks after the Bank warned that only one in 10 banks is adequately prepared for climate change.

“Climate change and society’s response to it presents financial risks that are relevant to the PRA’s objectives of safety and soundness,” the PRA said on Monday.

“Whilst these risks may crystallise in full over longer-time horizons, they are becoming apparent now.

“Firms are enhancing their approaches to managing these risks, but more need to take a forward-looking, strategic approach if financial risks are to be minimised.”

A Bank of England survey released last month found that around 30% of banks have included climate change in their so-called Corporate Social Responsibility (CSR) models, but that those efforts were mainly aimed at safeguarding their reputations.

Around 60% were considered “responsive” to climate change, approaching it as a financial risk but in a relatively narrow, short-term perspective.

Most lenders have started considering the physical risks to their business models, ranging from the exposure of its mortgage books to flood risks, “or the impact of extreme weather events on sovereign risk”.

But the most advanced strategies, accounting for just 10% of those banks surveyed, “enhance their governance and risk management accordingly to minimise financial risks and support an orderly transition”.