Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 273 report information sustainability report Governance review review statements Annual Report 2022 Material existing and emerging risks (continued) conditions but also to applicable local laws, restrict Barclays PLC’s ability to meet its For further details on the impacts of benchmark + interest rate reforms on the Group, refer to Note 41. capital regulations (including internal MREL obligations and/or to pay dividends to ordinary shareholders. requirements) and other restrictions vii) Change delivery and execution risks (including restrictions imposed by Shareholders should assume that, in a The Group will need to adapt and/or governments and/or regulators, which resolution situation, public financial transform the way it conducts business in limit management’s flexibility in managing support will only be available to a relevant response to changing customer behaviour the business and taking action in relation entity as a last resort after the relevant UK and needs, technological developments, to capital distributions and capital resolution authorities have assessed and regulatory expectations, increased allocation). These laws and restrictions used, to the maximum extent practicable, competition and cost management could limit the payment of dividends and the resolution tools, including the bail-in initiatives. Accordingly, effective distributions to Barclays PLC by its tool (the Bank of England’s preferred management of transformation projects is subsidiaries and any other entities in which approach for the resolution of the Group is required to successfully deliver the it holds an investment from time to time, a bail-in strategy with a single point of Group's strategic priorities, involving which could restrict Barclays PLC’s ability entry at Barclays PLC). The exercise of any delivering both on externally driven to meet its obligations and/or to make of such powers under the Banking Act or programmes, as well as key business capital distributions (such as dividends to any suggestion of any such exercise could initiatives to deliver revenue growth, ordinary shareholders and share materially adversely affect the value of product enhancement and operational buybacks). Barclays PLC ordinary shares and could efficiency outcomes. The magnitude, ix) Application of resolution measures lead to shareholders losing some or all of complexity and, at times, concurrent and stabilisation powers under the their investment. demands of the projects required to meet Banking Act these priorities can result in heightened In addition, any safeguards within the Under the Banking Act 2009, as amended execution risk. Banking Act (such as the ‘no creditor worse (Banking Act), substantial powers are off’ principle) may not result in The ability to execute the Group’s strategy granted to the Bank of England (or, in compensation to shareholders that is may be limited by operational capacity and certain circumstances, HM Treasury), in equivalent to the full losses incurred by the increasing complexity of the regulatory consultation with the PRA, the FCA and them in the resolution and there can be no environment in which the Group operates. HM Treasury, as appropriate, as part of a assurance that shareholders would In addition, whilst the Group continues to special resolution regime (SRR). These recover such compensation promptly. pursue cost management initiatives, they powers enable the relevant UK resolution may not be as effective as expected and Material existing and emerging authority to implement resolution cost saving targets may not be met. risks impacting individual measures and stabilisation options with The failure to successfully deliver or principal risks respect to a UK bank or investment firm achieve any of the expected benefits of and certain of its affiliates (currently i) Climate risk these strategic initiatives and/or the failure including Barclays PLC) (each, a relevant The risks associated with climate change to meet customer and stakeholder entity) in circumstances in which the are subject to rapidly increasing societal, expectations could have a material relevant UK resolution authority is satisfied regulatory and political focus, both in the adverse effect on the Group’s business, that the resolution conditions are met. UK and internationally. In line with results of operations, financial condition, The SRR consists of five stabilisation regulatory expectations and requirements, customer outcomes, prospects and options: (i) private sector transfer of all or the Group has embedded climate risk reputation. part of the business or shares of the within the Enterprise Risk Management viii) Holding company structure of relevant entity; (ii) transfer of all or part of Framework (ERMF), to address the Barclays PLC and its dependency on the business of the relevant entity to a financial and operational risks resulting distributions from its subsidiaries ‘bridge bank’ established by the Bank of from: (i) the physical risk of climate change; Barclays PLC is a holding company and its England; (iii) transfer to an asset and (ii) the risk from the transition to a low- principal sources of income are, and are management vehicle wholly or partly carbon economy. Climate risk is expected to continue to be, distributions owned by HM Treasury or the Bank of considered to be a driver of financial and (in the form of dividends and interest England; (iv) the cancellation, transfer or operational risks. payments) from operating subsidiaries dilution of the relevant entities’ equity Physical risks from climate change arise which also hold the principal assets of the (including Barclays PLC’s ordinary share from a number of factors and relate to Group. As a separate legal entity, Barclays capital) and write-down or conversion of specific weather events (acute) and PLC relies on such distributions in order to the relevant entity’s capital instruments longer-term shifts in the climate (chronic). be able to meet its obligations as they fall and liabilities (the bail-in tool); and (v) The nature and timing of extreme weather due (including its payment obligations with temporary public ownership (i.e. events are uncertain, but they are respect to its debt securities) and to nationalisation). increasing in frequency and in the potential create distributable reserves for capital In addition, the relevant UK resolution severity of economic impact. distributions (such as dividends to ordinary authority may, in certain circumstances, in The potential impact on the economy shareholders and share buybacks). accordance with the Banking Act require includes, but is not limited to, lower GDP The ability of Barclays PLC’s subsidiaries to the permanent write-down or conversion growth, higher unemployment, shortage pay dividends and interest and Barclays into equity of any outstanding Tier 1 capital of raw materials and products due to PLC’s ability to receive such distributions instruments, Tier 2 capital instruments and supply chain disruptions and significant from its investments in its subsidiaries and internal MREL prior to, or together with, changes in asset prices and profitability of other entities will be subject not only to the the exercise of any stabilisation option. industries. Damage to the properties and financial performance of such subsidiaries Any such action could result in the dilution operations of borrowers could decrease and entities and prevailing macroeconomic of Barclays PLC’s ordinary share capital,