March 4, 2021
Following a big campaign by Positive Money and partner organisations, Rishi Sunak has given the Bank of England the green light to fight the climate crisis, by giving it a brand new green mandate.
Yesterday, Chancellor Rishi Sunak updated the Bank of England’s Monetary Policy Committee mandate to “reflect the importance of environmental sustainability and the transition to net zero.”
This new mandate means that our central bank will now be able to use its powerful monetary policy toolkit to fight the climate crisis, and becomes the first country in the western world to do so. It’s a huge step towards stopping billions of pounds flowing to fossil fuels and is a big victory for our campaign to green the Bank of England as media coverage made clear.
As one of the most powerful institutions in the UK, the Bank is a key piece of the puzzle in greening our economy. That’s why we launched our report: A Green Bank of England back in 2018, and have been fighting for this change ever since.
When Andrew Bailey took over as the Bank’s new Governor last year, he promised greening the Bank’s activities would be “a priority”. But since then the Bank’s done far from enough. Their Covid corporate bailout scheme for instance, saw billions in public money end up in the hands of big polluters such as Shell and BP. In the words of Caroline Lucas MP, it was a “massively wasted opportunity”, to build back better by driving a fair, green recovery. So we started building up the pressure on the Treasury to update their mandate.
125 economists and civil society organisations signed an open letter we organised with the New Economics Foundation last November, which was covered by The Guardian and Financial Times. Hundreds of Positive Money heroes donated to splash an advert on the frontpage of Rishi Sunak’s local newspaper last month, and we gathered nearly 65,000 names on a joint petition alongside SumofUs and 350.org, demanding the Chancellor make this move, and sent it to his office last week.
This change is proof that he listened.
With this new mandate in hand, the Bank of England no longer has any excuse for dragging its feet on climate action. With the eyes of the world now on the UK to take the lead in further greening our international financial system, in the lead up to us hosting the UN’s big international climate conference, COP26, this November, it’s time for the Bank to step up.
Campaigners and experts are now hoping that this new mandate translates into a number of concrete policy changes, including the exclusion of fossil fuel assets from the Bank’s £20 billion corporate quantitative easing scheme, resulting in a shift of the carbon intensity of their portfolio away from its current path of 3.5C warming, and towards the 1.5C target of the Paris Agreement. The Bank should also now help catalyse more funding for greener alternatives, such as investment for green jobs via the new National Infrastructure bank, and by offering cheaper rates for green lending towards small businesses. All of these policies are now within reach. And now the Bank can no longer ignore our demands by passing the buck of responsibility for greening their activities back to the Treasury, we can’t wait to see what they do in the coming months.