Bank of England under fire for fossil fuel purchases

London, 16 April 2020 – Research and campaign group Positive Money has criticised Bank of England (BoE) governor Andrew Bailey for “breaking his promise” to decarbonise the central bank’s corporate quantitative easing (QE) programme, after the Bank revealed it is still willing to purchase bonds from fossil fuel and carbon-intensive companies.

In response to an open-letter co-ordinated by Positive Money, Bailey told MPs on the Treasury Select Committee in March that he would take forward aligning the BoE’s corporate bond purchases with the government’s emissions targets as “a priority”.

However, an updated list of eligible bonds for its expanded corporate QE scheme published on Wednesday showed that the BoE has failed to deliver on Bailey’s pledge to take climate into account, and is still willing to buy bonds from fossil fuel companies, including the likes of BP, Total and Shell’s BG Energy.

Fran Boait, executive director of Positive Money, said

“With the Bank of England signalling that it is willing to buy up bonds from corporations whose business models are wholly incompatible with the UK’s emissions targets, Andrew Bailey appears not only to be breaking his promise on climate, but also the Bank’s mandate to support the goals of the government.

“At the very least the Bank of England must stop buying bonds from fossil fuel companies with newly created public money. It should also consider excluding bonds issued by any other companies whose business model is not in line with the Paris Agreement and the government’s objective to reach net-zero carbon emissions by 2050.

“Corporate QE is another subsidy for multinational companies and is not necessary to save the economy or save lives. There is no need for our response to the coronavirus crisis to harm our response to the climate crisis.”

Notes

1. The Bank of England’s corporate QE programme involves the central bank buying up bonds from multinational corporations with newly created money. In March the BoE announced it would buy a further £10bn of corporate bonds, bringing the total size of the scheme to £20bn. The list of bonds eligible for purchase was updated on 15 April and be can be viewed in full here: https://www.bankofengland.co.uk/-/media/boe/files/markets/corporate-bond-purchases/bonds-eligible-for-the-corporate-bond-purchase-scheme.xlsx?la=en&hash=FB0E82E243C132FF5C4E506D732333CA3491718B

2. Further information about Andrew Bailey’s pledge on climate can be found here: https://positivemoney.org/2020/03/andrew-bailey-announces-crucial-step-towards-climate-friendly-bank-of-england/

3. Positive Money campaigns for a money and banking system which supports a fair, democratic and sustainable economy. Set up in the aftermath of the financial crisis, Positive Money is a not-for-profit company funded by charitable trusts and foundations, as well as small donations from its network of over 65,000 supporters. www.positivemoney.org

4. For any questions or for interviews with a spokesperson please contact simon.youel@positivemoney.org.uk or 07817765517