Principle 1: Banks should develop and implement a sound process for understanding and assessing the potential impacts of climate-related risk drivers on their businesses and on the environments in which they operate. Banks should consider material climate-related financial risks that could materialise over various time horizons and incorporate these risks into their overall business strategies and risk management frameworks. [Reference principles: BCP 14, SRP 30, Corporate governance principles for banks]

12. Banks should take material physical and transition risk drivers into consideration when developing and implementing their business strategies. This includes understanding and evaluating how these risks could impact the resilience of a bank's business model over the short, medium and longer terms and considering how these drivers may affect a bank's ability to achieve its business objectives. This also includes understanding and assessing a bank's exposure to structural changes in the economy, financial system and competitive landscape in which the bank operates as a result of climate-related risk drivers. The board and senior management should be involved in relevant stages of the process, and the approach established by the board should be clearly communicated to the bank's managers and employees.

13. The board and senior management should consider whether the incorporation of material climate-related financial risks into the bank's overall business strategy and risk management frameworks may warrant changes to its compensation policies, taking into account that these should be in line with the business and risk strategy, objectives, values and long-term interests of the bank.