London, 8 October 2021
Bank of England governor Andrew Bailey has today received an open letter from 85 parliamentarians from across Britain’s main political parties, urging him to align UK finance with the government’s climate goals.
The letter, signed by 60 MPs and 25 peers, recommends that the Bank of England 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. It cites International Energy Agency guidance that investment in new oil, gas and coal supply must stop this year to reach net zero by 2050, and notes that UK finance is out of step with targets set under the Paris Agreement.
- Liberal Democrat leader Ed Davey
- Former Labour leader Jeremy Corbyn
- SNP economy spokesperson Kirsty Blackman
- Former Conservative Minister Peter Bottomley
- Pensions expert and Conservative peer Ros Altmann
- Theresa May’s former Environment Adviser and Conservative peer John Randall
Campaigners staged a hand-in outside the Bank of England this morning, brandishing a giant version of the letter.
The letter recommends that the Bank of England:
- Adjusts its lending schemes to provide cheaper credit to commercial banks, conditional on banks expanding their lending for sustainable projects, particularly to SMEs.
- Partners with the new UK Infrastructure Bank, to provide additional capital to support increased investment in a fair and green transition.
- Mandates that all UK financial institutions outline credible transition plans aligned with the Paris Agreement.
- Reflects the high risk of fossil fuel lending in regulation.
- Develops real economy targets such as on green job creation and emissions reductions, for which Parliament can hold policymakers to account.
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 over 80 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:
“To see so many politicians from across the political spectrum united on this issue shows the huge public appetite for fast and ambitious action to decarbonise our financial system.
“This crucial COP26 year has seen mounting pressure on the Bank of England as experts, members of the public, and now 85 politicians representing millions of people across the country join calls for faster action. As our central bank with a mission to serve ‘the good of the people’, Andrew Bailey needs to listen and step up.
“With COP26 around the corner and all eyes on the UK, we look forward to seeing a response from the Bank of England governor that matches the urgency of the crisis. We’re asking him to take concrete steps towards winding down investment in new fossil fuels and redirecting funds to green job-creating alternatives, in line with a growing international consensus.”
- Photos of the hand-in are available for use here: https://drive.google.com/drive/folders/1vEciXRMrWKpBPBAevXLV0UNUxmxJrj7p?usp=sharing
- The full letter is available here: http://positivemoney.org/wp-content/uploads/2021/09/Green-finance-open-letter-to-Andrew-Bailey-1.pdf
- 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/
- 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
- 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/
- 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/
- 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
- 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
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