• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Go to Positive Money Europe
  • Go to Positive Money US

Positive Money

Making money and banking work for society

  • About us
    • Our vision
    • Who we are
    • History & highlights
    • Contact us
    • Current vacancies
    • In the media
    • Funding & Annual Reports
  • What we do
    • Educate & empower
    • Research and Policy
    • Campaign & local groups
    • Influence decision makers
    • In the media
    • International Movement
    • Events
  • Resources
    • Videos
    • Publications
    • Local group resources
    • Lobby your MP
    • Organise an Event
    • Policy resources
    • Shop
  • Press
  • Blog
  • Donate
  • Positive Money Europe
  • Positive Money US

Positive Money leads call for new Bank of England governor to step up climate action

by Simon Youel

More than 100 leading experts and civil society figures have signed a letter co-ordinated by Positive Money calling for the incoming Bank of England governor to accelerate efforts to decarbonise our financial system.

With everything else going on, from post-Brexit bargaining to the threat of a coronavirus-fuelled financial meltdown, there was a risk that the climate crisis might be left off the agenda for incoming Bank of England governor Andrew Bailey.

But working with our friends from the New Economics Foundation, Greenpeace, the SOAS Centre for Sustainable Finance and E3G, we’ve made sure that climate stays high up in the new governor’s in-tray when he takes over on Monday 16th, where it belongs.

Ahead of his pre-appointment hearing in front of MPs on the influential Treasury Select Committee today, we coordinated an open letter to Andrew Bailey on climate which has been signed by more than 100 leading experts and civil society figures.

Among the 101 signatories are former government chief scientific advisor Sir David King, ex-Citigroup chief economist and former Bank of England Monetary Policy Committee member Willem Buiter and conservationist Jane Goodall, as well as three members of the UK’s influential Committee on Climate Change (CCC) and four expert advisers to the UK’s citizen Climate Assembly.

As chief regulator of the UK’s financial system, the Bank of England has a key role to play in facilitating the huge re-allocation of capital required for the transition to a green economy. Under outgoing governor Mark Carney, the Bank made a welcome start by disclosing it’s climate risk and recognising the severity of the threat climate change posed to economic and financial stability, warning that up to $20tn could be lost from stranded carbon assets. 

But as Mark Carney leaves, a change in leadership risks the momentum we need to green the financial system being lost. And with less than a decade left to decarbonise and  stay below the 1.5c upper-safe limit upper-safe limit for global temperature rises governments have committed to in the Paris Agreement, we simply can’t afford progress to slow.

As our letter warns, the measures currently being taken by the Bank of England “are unlikely to be enough” to help the government meet its climate targets. Mark Carney has warned that the financial system is currently funding global temperature rises of more than 4C – more than double the target we need to stay below if we’re to avoid truly catastrophic impacts to life on earth.

The letter therefore urges Andrew Bailey to use his new position as head of Britain’s central bank to “lead the way” and  align finance with a 1.5c target ahead of this year’s global climate summit in Glasgow (COP26). We’ve asked him to take three specific steps:

Mandatory disclosure of climate risk

Firstly, the Bank must force all the firms it regulates to disclose their climate risk. This would  illustrate the extent to which firms are exposed to climate change and allow lending decisions to be adjusted accordingly. The Bank of England has started asking companies to do this voluntarily, but with less than a decade to act, we believe this crucial first step should be made mandatory “as soon as possible”.

Decarbonise monetary policy

Secondly we’re calling for the new governor to exclude fossil fuel assets from any future rounds of quantitative easing (QE) it might run after it’s previous £10bn corporate QE programme was found to have been heavily skewed towards high-carbon sectors. Under that programme the Bank bought up bonds from fossil fuel companies including Shell, BP and Total. In doing this, the Bank would “lead by example” and, as the letter states, “send a powerful signal that holding these assets undermines long-term financial stability, and is incompatible with the Paris goals”. In this spirit the Bank must also refuse to accept any fossil fuel assets from private banks as collateral.

Consider penalising high-carbon lending

Thirdly, we urge Andrew Bailey to consider using the so-called ‘macroprudential’ powers at the central bank’s disposal to clamp down on risky fossil fuel lending. This would mean the Bank of England applying the same tools it uses to manage risk in the mortgage market to guard against the risks posed by climate collapse as well. By increasing the amount of capital banks need to hold against high-carbon loans to accurately reflect the risk, the Bank of England can help stem the flow of money going towards environmental breakdown.

The letter has already been covered by City AM, Yahoo Finance, The Guardian, Financial Reporter, London Loves Business and Insider.co.uk.

We hope MPs on the Treasury Select Committee will use this letter to challenge Andrew Bailey to lead the way on climate this afternoon, and factor this into their decision on whether to approve his appointment for one of the most powerful positions in our economy.

You can see the full letter and list of signatories here.

Others andrew bailey, Bank of England, climate change, climate crisis, disclosure, green finance, investment, Treasury Select Committee

Simon Youel

Policy and Media Officer, Positive Money

Simon works on Positive Money’s influencing programme, focusing on media engagement and policy research.

Before joining Positive Money, Simon handled media outreach for a number of technology companies and campaigns, and worked in a variety of roles in local government. He has a Masters in History from the University of Manchester, for which he specialised in the financialisation of the British economy.

Primary Sidebar

Get our latest campaign updates

Recent Posts

  • Interest rate decision – Positive Money response
  • Concerns raised over vested interests of Lords pushing for financial deregulation
  • We need more than new homes: new census data confirms UK building stock is growing faster than population
  • 12 highlights from 2022
  • Positive Money at The World Transformed

Footer

Follow us on social media

  • Facebook
  • Instagram
  • Twitter
  • YouTube

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.


Privacy Policy, Terms & Conditions


Positive Money is a company limited by guarantee registered in England and Wales. Registered number 07253015.
Registered office: 104 Davina House, 137-149 Goswell Road, London EC1V 7ET.


Positive Money Europe