Lawmakers urge Bank of England to regulate fossil finance

London, 16 September 2021

Over 50 MPs and peers from across Britain’s main political parties have written to the Bank of England governor, Andrew Bailey, encouraging him to align UK finance with the government’s climate goals. 

The letter recommends that the Bank of England, as the public institution tasked with overseeing Britain’s financial system, uses the new green mandate given to it by the Treasury to help steer billions of pounds of finance away from risky fossil fuel investments and towards green, job-creating alternatives.

The signatories warn that climate change and biodiversity loss are already jeopardising the Bank’s ability to meet its core objectives, and urge Bailey to put its new green remit into practice “in a manner commensurate with the scale and urgency of the challenges we are facing”.

The letter remains open for parliamentarians to sign-on until October, when a full list of signatories will be delivered to the Bank of England. 

Caroline Lucas, MP for Brighton Pavillion and one of the signatories of the letter, said:

“UK banks are continuing to drive the climate emergency, with our five biggest lenders pouring £227 billion into fossil fuels between 2016 and 2020. 

“After years of delay, it’s time for all of our public institutions to play their part in getting the City of London in order. That’s why, alongside nearly 50 MPs MPs and peers, I’m calling on the Bank of England to step up its ambition before COP26 and make sure the financial system is aligned with the UK’s international climate commitments. 

“Finance has been identified as a COP26 priority by the UK so we need to get our own house in order. That starts with the Bank of England setting out clear rules to penalise fossil fuel lending and encourage the essential investment in sustainable infrastructure and green jobs.”  

Rachel Oliver, Head of Campaigns and Organising at research and campaign group Positive Money, said:

“With all eyes on the UK ahead of the crucial COP26 talks, it’s promising to see that a more ambitious approach to green finance is gaining strong support across the political spectrum. 

“To keep global warming within 1.5 degrees, all investment in new fossil fuel projects must end this year. Yet the Bank of England continues to let banks flood our economy with risky lending to dirty energy. Unless the Bank of England sets finance on a new path, we will keep heading towards environmental breakdown and risk a new financial crash. 

“We hope the Bank of England governor Andrew Bailey takes this letter as impetus to rapidly accelerate efforts to green the financial system, starting with rules to make it much harder for banks to lend to fossil fuels.”

Notes 

1. The full letter is available here (and will be regularly updated with new signatories): http://positivemoney.org/wp-content/uploads/2021/09/Green-finance-open-letter-to-Andrew-Bailey-1.pdf

2. The recommendations are based on a New Economics Foundation and Positive Money report, ‘Greening Finance to Build Back Better’, June 2021: https://positivemoney.org/publications/greening-finance/ 

3. The Bank of England’s latest climate disclosure report revealed that the central bank’s asset purchases are funding 3C global heating – double the 1.5C target the UK government is committed to via the Paris Agreement, 17 June 2021: https://www.bankofengland.co.uk/prudential-regulation/publication/2021/june/climate-related-financial-disclosure-2020-21 

4. The biggest 5 UK banks have financed £227 billion (US$315 billion) into fossil fuels since the signing of the Paris Agreement in November 2015. Banking on climate chaos, Fossil Fuel Finance Report 2021: https://www.ran.org/bankingonclimatechaos2021/

5. UK finance is responsible for a total of 805 million tonnes of greenhouse gases. That’s 1.8 times more than the UK as a whole emitted that year and more than the whole of Germany (2019 data): Big Smoke, Greenpeace/WWF: https://www.greenpeace.org.uk/resources/big-smoke-uk-finance-report/ 

6. The International Energy Agency has warned that there can be no new oil, gas or coal development if world is to reach net zero by 2050, 17 May 2021: https://www.iea.org/reports/net-zero-by-2050 

7. In May 2021, the UN Secretary General Antonio Gutteres, said: “There must be no new coal plants built after 2021… Countries should also end all new fossil fuel exploration and production, and shift fossil fuel subsidies into renewable energy.”: https://www.un.org/sg/en/content/secretary-generals-statement-the-ipcc-working-group-1-report-the-physical-science-basis-of-the-sixth-assessment 

8. For more information or to arrange a briefing/interview with a spokesperson, please contact press@positivemoney.org.uk or Anna Pick on 07948802104.