SS5/25

Governance and senior management accountability

SBoards and senior management are expected to have effective oversight of material climate-related risks, with clearly allocated responsibilities and risk appetite statements that include explicit, climate-specific limits. They are expected to approve a formal climate policy statement covering the firm’s approach to identifying and managing climate risk, and to ensure that climate-related exposures are incorporated into existing risk registers alongside other material risk types. Management information must be sufficiently granular to be decision-useful. Boards need access to portfolio-level data that supports real business decisions – a high-level summary prepared once a year does not meet this expectation.

Risk management and transmission channels

Climate-related financial risks reach mortgage lenders through three transmission channels identified by the PRA: physical risks (flooding, subsidence, extreme weather events), transition risks (regulatory policy changes, EPC requirements, and MEES compliance), and litigation risk – for example, where a firm faces legal challenge over failure to disclose or adequately manage climate-related exposures. SS5/25 expects firms to embed the management of these risk types within existing risk management frameworks, including their effects on credit risk, liquidity risk, collateral values, and portfolio concentration, and to consider how material climate-related risks intersect with operational resilience.

For banks with significant mortgage exposures, this includes understanding how physical climate events can impair the value of assets on the balance sheet, affect the creditworthiness of borrowers and counterparties over time, and generate capital requirement pressures not anticipated at the point of origination.

The clearest physical risk pathway for mortgage lenders is collateral impairment. A property at high flood risk may become difficult or expensive to insure, which raises the probability of borrower default and reduces the value of the collateral at enforcement. The PRA is explicit: insurance retreat – where flood cover becomes unavailable or unaffordable for specific properties – is a material transmission channel that must be factored into the risk profile of a mortgage book.

Climate scenario analysis

Firms must use climate scenario analysis (CSA) to support risk identification and inform decision-making across multiple time horizons. Short-term analysis is a starting point. Lenders are expected to understand how their portfolios perform under Paris-aligned scenarios and under higher-warming, business-as-usual pathways, over 30-year and 75-year timelines. Sensitivity analysis alongside CSA helps firms understand how much their conclusions depend on specific model inputs or data assumptions – an important dimension given the inherent uncertainty in long-range climate projections.

Where material climate-related risks are present, SS5/25 also expects firms to consider reverse stress testing to identify scenarios that could render the business model unviable. For lenders with significant exposure to flood-prone areas or a high proportion of low EPC-rated properties, this is not a theoretical exercise. For banks, it feeds directly into the internal capital adequacy assessment process (ICAAP), ILAAP, and capital planning processes the Prudential Regulation Authority will scrutinise. For insurers, the equivalent obligations sit within the own risk and solvency assessment (ORSA), which should now incorporate material climate-related risks as part of the solvency assessment – including the SCR where relevant.

Data and data provenance

This is where SS5/25 sharpens most significantly compared to its predecessor. Chapter 4 is clear: financial institutions cannot accept climate risk data from third-party providers without scrutiny. Firms should identify data gaps, document where proxies and assumptions have been used, and actively interrogate the methodologies behind any external data they rely on. This applies equally to the internal models firms use for credit assessment and capital calculations – where climate risk inputs feed into those models, the data provenance behind those inputs must be documented and defensible.

The requirement for data provenance is the mechanism by which a lender can demonstrate compliance to a supervisor. When a supervisor asks how the firm reached a particular conclusion about its flood exposure, the answer must point to a specific data source, a specific methodology, and a specific property or set of properties. A risk score that cannot be attributed is difficult to defend.

Disclosures

Public disclosures must be consistent with internal governance and risk management practices. They should reflect the proportionality and materiality of the firm’s climate risk profile, be decision-useful, and be clearly linked to internal processes. As international standards, including the ISSB framework, continue to align climate-related financial reporting with mainstream financial reporting requirements, PRA-regulated firms face growing expectations around the consistency between their ESG disclosures and internal risk governance. Supervisors will look for coherence between what a firm publishes and how it actually manages material climate-related risks.

Why summary reports create compliance risk for financial institutions

Many lenders currently use climate risk assessments that aggregate exposure at regional or postcode level, or produce composite scores without attributing them to specific data sources or properties. Under SS5/25, this approach creates real compliance risk – not just on the data side, but structurally.

The PRA is specific: climate change-related risk assessments must capture “property-level exposures to flooding that may not be adequately reflected in macro-level scenarios.” A postcode-level flood overlay does not satisfy this. A summary score without source attribution cannot constitute data provenance.

There is also the question of integrated risk. Lenders face what might be described as “double impairment” scenarios: properties that are simultaneously at high physical risk (flood, subsidence) and significantly exposed to transition risk (low EPC rating, MEES non-compliance before 2030). Reports that treat physical and transition risk as separate analyses leave lenders without a coherent view of where their exposures’ main vulnerabilities actually sit, and without the integrated picture their CSA and financial reporting obligations require.

Data fragmentation makes this worse. Mortgage portfolio data sits in internal systems, typically in Bank of England template format. Physical risk data comes from specialist providers. Transition risk data comes from property databases. The framework that pulls all of this into a supervisory-grade, fully attributed output does not, for most lenders, yet exist in a usable form.

“Lenders do not need another generic climate document. What they need is a practical way to evidence their position, using their own portfolio data, with enough transparency to show how conclusions have been reached,” Frank Wall, Co-founder and CPO of InCol Intelligence, explains.

Climate risk assessment report for SS5/25

InCol Intelligence’s report – incorporating property data from PriceHubble and climate risk data from Twinn by Haskoning – has been developed to support SS5/25 reporting requirements through a structured, property-level climate risk assessment for UK mortgage lenders.

InCol Intelligence: the reporting engine

InCol Intelligence provides the processing and reporting framework. It ingests the lender’s portfolio data alongside enriched property and climate data from PriceHubble and Twinn by Haskoning, and produces a structured output with full data attribution throughout. The lender retains control of the narrative at every stage.

“One of the strengths of this report is that it gives the lender control of the narrative. The platform supports the analysis, but the institution remains in charge of the final story it wants to tell,” Frank Wall explains.

PriceHubble: property-level climate data and valuation analytics

PriceHubble provides property-level climate data matched directly to the lender’s mortgage portfolio via Property Title Numbers. This covers flood depth projections across fluvial, pluvial, and tidal sources, subsidence risk scores, EPC ratings, and carbon intensity metrics.

Matching at the property level – rather than at postcode or regional level – is essential for meeting SS5/25’s expectations on granularity, and for supporting well-informed underwriting and collateral assessment decisions across the book.

“The UK mortgage market contains millions of properties with substantially different climate risk profiles that cannot be adequately captured at postcode or regional level. PriceHubble gives the ability to surface that granularity, matched to the lender’s own book, so that risk assessments are based on real, property-level evidence rather than broad approximations. That is the foundation any credible SS5/25 assessment needs,” says Mark Cunningham, Managing Director, PriceHubble UK.

Twinn by Haskoning: granular physical risk intelligence

Twinn by Haskoning provides climate risk data supporting the analysis and reporting process.

“Reliable climate risk data is an important component of effective climate risk reporting. We’re pleased to support this initiative by providing the climate risk intelligence underpinning the report,” Mark Nunns, Associate Director at Twinn by Haskoning, explains.

Under SS5/25, lenders need to demonstrate not just general awareness of climate risk, but the ability to identify, evidence, and understand it at both portfolio and property level – by source, and across multiple scenarios. The workflow is straightforward: the lender uploads portfolio data, InCol orchestrates queries to PriceHubble and Twinn by Haskoning, data is matched and enriched at property level, and InCol generates the structured, attributed report.

What the report delivers

The output is a comprehensive, property-level climate risk assessment designed in line with SS5/25 requirements across all five supervisory expectation areas.

• Regulatory alignment: The report addresses Scope, Materiality Assessment, Time Horizons, and Data Provenance directly – the framework the PRA will expect to see evidenced.

• Physical risk analysis: Flood risk is assessed by source (fluvial, pluvial, tidal), with present-day baselines at a 1-in-20-year event, forward-looking projections at 30-year and 75-year timelines under three RCP scenarios (2.6, 6.0, and 8.5), and individual identification of properties at “High” or “Very High” risk. Balance exposure in £ values and insurance status are flagged for each. Subsidence risk is assessed in parallel.

• Transition risk assessment: EPC ratings, Green Asset Ratios, and MEES compliance are assessed across the portfolio. Properties at risk of regulatory non-compliance by 2030 are identified, and CO2 reduction potential is quantified at portfolio level.

• Scenario resilience: A CSA stress test shows how the portfolio performs under both Paris-aligned and business-as-usual climate futures, identifying risks that persist across all scenarios. This directly supports the reverse stress testing and ICAAP considerations SS5/25 expects from lenders with material climate-related exposures.

• Prioritised recommendations: A structured action plan with immediate, short-term, and medium-term steps – for example, a collateral review for properties where insurance issues have been flagged, or enhanced monitoring for properties with elevated subsidence risk.

• Data provenance: Every data point is attributed to its source. Every conclusion is traceable to the specific property and dataset that underpins it – the core requirement for evidencing compliance under SS5/25 Chapter 4.

Frank Wall explains: “What is distinctive is the combination of the different capabilities. This is not just a generic climate overlay or a high-level summary report. It is a way of joining lender data, property intelligence, and climate risk intelligence together so that the final output is evidence-based, explainable, and capable of standing up to scrutiny.”

Why this matters beyond June 2026

The June 2026 deadline is pressing, but the value of a well-constructed, fully attributed climate risk assessment extends well beyond that date.

Lenders who build a clear, property-level understanding of their climate risk exposures now are better placed to make informed underwriting decisions on new loans, sustain robust capital planning processes as material climate-related risks evolve, and use CSA as a genuine strategic planning tool – not just a compliance exercise.

Beyond regulatory compliance, a well-constructed climate risk management framework supports the sustainability credentials lenders are increasingly expected to demonstrate to investors, counterparties, and regulators in financial services. The integration of physical and transition risk into lending decisions is becoming a dimension of sound, long-term business strategy – not only a supervisory requirement.

The inclusion of RCP scenarios extending to the 2080s means the report is not a one-time output. It is the foundation for an ongoing climate risk management framework that meets current supervisory expectations and positions lenders for the regulatory direction of travel the PRA has signalled for the years ahead.

For lenders currently assessing their readiness and business strategy for SS5/25, the question worth asking is a straightforward one: if a supervisor asked to see your internal review today, could your current climate risk analysis hold up to scrutiny?

If the honest answer is uncertain, a conversation is worth having.

Request a demo or see a sample report to understand what a full-attribute, property-level SS5/25 climate risk assessment looks like in practice.