SS5/25
SS5/25: From Climate Awareness to Climate Accountability
The defining challenge of SS5/25 is not climate risk. It is evidence.
The Prudential Regulation Authority (PRA) now expects firms to demonstrate, with clear and traceable evidence, how climate-related financial risks have been identified, assessed, managed and incorporated into decision-making processes. For lenders, this represents a significant shift from climate awareness to climate accountability.
For banks, building societies and insurers, this represents a significant shift. Climate risk is no longer viewed as a standalone ESG exercise. It now intersects directly with credit risk, collateral management, capital planning, operational resilience and corporate governance.
Published on 3 December 2025, SS5/25 replaces SS3/19 and establishes a more detailed supervisory framework for managing climate-related financial risks. The statement raises the standard across governance, risk management, climate scenario analysis, data management and disclosures, with a particular emphasis on the quality and traceability of the evidence supporting a firm's conclusions.
The implementation timetable is already underway. Firms were expected to complete an internal assessment of their readiness by 3 June 2026, identifying any gaps and developing an appropriately ambitious remediation plan. Supervisors may request sight of these assessments, together with supporting evidence and implementation plans.
For mortgage lenders, the implications are particularly significant. The PRA's expectations extend beyond portfolio-level assessments and require firms to understand climate-related exposures at property level. Institutions must be able to demonstrate how climate-related risks have been incorporated into lending decisions, risk frameworks, governance processes and capital assessments across their mortgage books.
As Frank Wall, Co-Founder and Chief Product Officer of InCol Intelligence, explains:
"Lenders do not need another generic climate report. They need a practical framework that enables them to evidence their position using their own portfolio data, while providing sufficient transparency to understand how every conclusion has been reached. InCol Intelligence delivers this framework."
At its core, SS5/25 represents a move from broad climate commitments towards demonstrable evidence. The challenge facing firms is no longer whether climate risk is relevant, but whether they can clearly evidence how it has been assessed and managed throughout the organisation.
The PRA's Core Expectations Under SS5/25
SS5/25 is structured around five key supervisory pillars: Governance, Risk Management, Climate Scenario Analysis (CSA), Data and Disclosures. Together, these areas establish the framework through which the PRA expects firms to identify, assess, manage and evidence climate-related financial risks.
For mortgage lenders, the expectations are considerably more detailed than those set out under SS3/19 and require a greater degree of transparency, documentation and supporting evidence.
Governance and Board Oversight
SS5/25 places clear responsibility for climate-related financial risk within existing governance structures. Boards and senior management are expected to maintain effective oversight of material climate-related exposures, supported by clearly defined responsibilities, appropriate reporting lines and climate considerations embedded within risk appetite frameworks.
Firms should maintain a documented climate risk policy and ensure climate-related risks are incorporated within existing governance and risk management arrangements. Management information provided to boards should be sufficiently detailed to support informed decision-making and effective challenge where necessary.
Risk Management and Climate Risk Transmission
The PRA identifies three primary channels through which climate-related financial risks may affect firms: physical risk, transition risk and litigation risk.
Physical risks include hazards such as flooding, subsidence and severe weather events. Transition risks arise from changing regulation, evolving energy performance standards and wider economic changes associated with the transition to a lower-carbon economy. Litigation risks may emerge where climate-related exposures are inadequately managed or disclosed.
These risks should be integrated into existing enterprise risk management frameworks, with firms considering their implications for credit risk, collateral values, liquidity, portfolio concentrations and operational resilience.
For mortgage lenders, one of the most significant transmission channels is collateral impairment. Properties exposed to elevated physical risk may become more difficult or costly to insure, potentially affecting both borrower affordability and collateral values over time.
Climate Scenario Analysis
CSA is a key component of the SS5/25 framework. Firms are expected to assess how climate-related risks may evolve across different time horizons and under different climate pathways.
This includes evaluating portfolio performance under both lower-warming and higher-warming scenarios, alongside sensitivity analysis to understand how outcomes may vary under different assumptions.
Where climate-related risks are considered material, firms should also consider reverse stress testing and assess the implications for capital planning, risk management and long-term business resilience.
Data Quality and Data Provenance
One of the most significant developments within SS5/25 is the enhanced focus on data governance and evidence.
Firms remain responsible for understanding the data that underpins their climate risk assessments, including any information obtained from third-party providers. Data gaps, assumptions, proxies and methodologies should be documented and capable of withstanding supervisory scrutiny.
Data provenance is particularly important. Firms should be able to demonstrate how conclusions were reached, which datasets were used and how individual properties or exposures contributed to the final assessment. Traceability is increasingly becoming a prerequisite for evidencing compliance.
Disclosures
Climate-related disclosures should accurately reflect the firm's governance arrangements, risk management processes and assessment methodologies.
As supervisory and reporting expectations continue to evolve, organisations are expected to maintain consistency between public disclosures and internal risk management practices. The ability to evidence and support published statements is becoming an increasingly important component of regulatory compliance.
Why High-Level Climate Reports May Create Compliance Challenges
Many climate risk assessments currently available to lenders rely on aggregated data, regional averages or postcode-level analysis. While these approaches can provide a broad indication of exposure, they may fall short of the level of evidence and transparency expected under SS5/25.
A key theme running through the PRA's supervisory statement is the need for firms to understand climate-related financial risks at an appropriately granular level. For mortgage lenders, that ultimately means understanding how climate-related risks affect individual properties, specific exposures and overall portfolio performance.
The PRA has explicitly highlighted the importance of identifying property-level flood exposures that may not be visible through higher-level portfolio or regional analysis. As a result, reliance on postcode averages, composite risk scores or unattributed outputs may leave firms unable to demonstrate how conclusions were reached or what evidence underpins their assessments.
There is also an increasing need to consider physical and transition risks together. A property may be exposed to elevated flood or subsidence risk while simultaneously facing transition-related challenges such as poor EPC performance or future MEES (Minimum Energy Efficiency Standards) compliance requirements. Assessing these risks separately can obscure the true vulnerability of an asset and make it more difficult to understand the overall risk profile of the portfolio.
The challenge is compounded by data fragmentation. Mortgage portfolio information is typically held within lender systems, while climate, property and energy performance data often originate from multiple specialist providers. Bringing these datasets together in a way that is transparent, traceable and suitable for regulatory review remains a significant challenge for many organisations.
Addressing these challenges requires more than additional climate data. It requires a framework capable of integrating lender portfolio data, property intelligence and climate risk information into a single evidence-based assessment
A Climate Risk Assessment Framework Designed for SS5/25
InCol Intelligence has developed a property-level climate risk assessment framework specifically designed to support lenders responding to the requirements of SS5/25.
The solution combines lender portfolio data with property intelligence provided by PriceHubble and climate risk intelligence supplied by Twinn by Haskoning, producing a structured and fully attributable assessment of climate-related financial risks across the mortgage book.
Rather than generating high-level climate overlays, the objective is to provide lenders with an evidence-based assessment that supports governance, risk management, climate scenario analysis, disclosures and data provenance requirements.
InCol Intelligence: Bringing Data, Analysis and Evidence Together
InCol Intelligence acts as the orchestration, analysis and reporting layer within the assessment process.
The platform integrates portfolio data supplied by the lender with enriched property and climate datasets, creating a consolidated framework through which climate-related risks can be assessed, documented and reported. Throughout the process, data lineage is maintained, enabling firms to understand the origin of individual data points and the basis for the conclusions reached.
Importantly, the platform supports analysis and reporting while allowing institutions to retain ownership of the final narrative.
As Frank Wall notes:
"The role of the platform is to provide the evidence and analysis. The lender remains fully in control of the narrative, the interpretation and the decisions that ultimately flow from the assessment."
PriceHubble: Property Intelligence at Individual Asset Level
PriceHubble contributes property-level intelligence that is matched directly against mortgage portfolios using Property Title Numbers.
This includes information relating to flood depth projections across fluvial, pluvial and tidal sources, subsidence indicators, EPC performance and carbon intensity measures.
The ability to analyse individual properties rather than relying on postcode or regional averages is particularly important in the context of SS5/25. Property-level matching enables lenders to identify specific exposures, assess concentrations of risk and support more informed collateral and underwriting decisions.
As Mark Cunningham, Managing Director of PriceHubble UK, explains:
"Climate-related risks can vary significantly between neighbouring properties. Effective risk assessment therefore requires analysis at the level of the individual asset rather than broad geographic approximations. Property-level data provides the granularity required to support credible climate risk assessments."
Twinn by Haskoning: Climate Risk Intelligence
Twinn by Haskoning provides the physical climate risk data that underpins the assessment process.
Its datasets support the evaluation of climate-related hazards across multiple scenarios and time horizons, helping lenders understand both current and projected physical risk exposures.
According to Mark Nunns, Associate Director at Twinn by Haskoning:
"High-quality climate risk data is a critical component of effective climate risk management. Reliable, transparent and scientifically grounded information enables organisations to make better-informed decisions and strengthen their reporting capabilities."
Together, lender portfolio data, property intelligence and climate risk intelligence are combined through InCol Intelligence into a single reporting framework designed to support supervisory expectations under SS5/25.
What the Assessment Provides
The resulting report delivers a structured climate risk assessment aligned to the PRA's five supervisory expectation areas.
Regulatory Alignment
The assessment directly addresses key supervisory considerations including scope, materiality, time horizons, scenario analysis and data provenance, helping firms evidence the areas supervisors are most likely to examine.
Physical Risk Assessment
Flood exposure is evaluated by source, including fluvial, pluvial and tidal flooding. Analysis incorporates current conditions together with forward-looking projections over 30-year and 75-year horizons using multiple climate scenarios.
Properties identified as presenting elevated levels of risk can be highlighted individually, together with associated balance exposures and insurance considerations. Subsidence risk is assessed alongside flood exposure to provide a broader view of physical climate-related vulnerabilities.
Transition Risk Assessment
The assessment reviews EPC ratings, Green Asset Ratios, carbon intensity measures and future MEES compliance considerations across the portfolio.
This enables lenders to identify assets potentially exposed to future regulatory requirements and assess opportunities for carbon reduction and portfolio improvement.
Climate Scenario Analysis and Resilience Testing
Scenario analysis evaluates how the portfolio performs under both lower-warming and higher-warming climate pathways, helping firms understand how exposures may evolve over time.
The results can support climate stress testing activities, reverse stress testing exercises and broader capital planning processes, including ICAAP-related assessments where appropriate.
Action-Oriented Recommendations
In addition to identifying exposures, the report provides prioritised recommendations designed to support practical risk management actions.
These may include enhanced monitoring, collateral reviews, engagement strategies or additional investigation of specific properties and concentrations of risk.
Full Data Attribution
Every output within the assessment is linked back to its underlying source data.
This enables firms to trace conclusions to the specific property, dataset and methodology from which they were derived, supporting one of the core evidential requirements established within Chapter 4 of SS5/25.
As Frank Wall explains:
"The value comes from bringing multiple sources of information together within a single evidence framework. The objective is not simply to produce another climate report, but to create an assessment that is explainable, transparent and capable of supporting supervisory scrutiny."
Looking Beyond the Initial Compliance Deadline
While the June 2026 review deadline has focused attention on climate risk management, the benefits of establishing a robust climate risk framework extend well beyond regulatory compliance.
Firms that develop a detailed understanding of climate-related exposures today are better positioned to support future lending decisions, strengthen portfolio management practices and incorporate climate considerations into long-term strategic planning.
A well-constructed climate risk framework can also support investor engagement, sustainability objectives and broader risk management activities by providing a clearer understanding of how physical and transition risks may influence future portfolio performance.
Because the assessment incorporates forward-looking climate scenarios extending several decades into the future, it can serve as an ongoing management tool rather than a one-off compliance exercise.
For lenders considering their current position, a simple question remains: if a supervisor requested evidence of your climate risk assessment today, could you clearly demonstrate how every material conclusion was reached?
If the answer is uncertain, the challenge may not be climate risk itself. It may be evidencing how that risk has been identified, assessed and managed.
Request a demonstration or review a sample report to see how a fully attributed, property-level climate risk assessment can support compliance with SS5/25 and strengthen climate risk governance across the organisation.