Principle 5: Banks should identify and quantify climate-related financial risks and incorporate those assessed as material over relevant time horizons into their internal capital and liquidity adequacy assessment processes, including their stress testing programmes [As defined in the BCBS report Climate-related financial risks - measurement methodologies, the term stress test is understood as an evaluation of a financial institution's financial position under a severe but plausible scenario.] where appropriate. [Reference principles: BCP 15, BCP 24, SRP 20, SRP 30]

23. Banks should develop processes to evaluate the solvency impact of climate-related financial risks that may materialise within their capital planning horizons. Banks should include climate-related financial risks assessed as material over relevant time horizons that may negatively affect their capital position (ie through their impact on traditional risk categories) in their internal capital adequacy assessment process.

24. Banks should assess whether climate-related financial risks could cause net cash outflows or depletion of liquidity buffers, assuming both business-as-usual and stressed conditions (considering severe yet plausible scenarios). Banks should include climate-related financial risks assessed as material over relevant time horizons that may impair their liquidity position in their internal liquidity adequacy assessment process.