Members of the British parliament have called on the Bank of England (BoE) to align UK finance with the government’s climate goals.
A cross-party group of 43 British members of parliament have written to Governor Andrew Bailey, urging him to put the central bank’s new green remit into practice “in a manner commensurate with the scale and urgency of the challenges we are facing”. The open letter has also been signed by eight members of the House of Lords and endorsed by leading civil society groups.
“Climate change and biodiversity loss are already jeopardising the BoE’s ability to meet its core objectives,” the letter says. “The financial sector the BoE oversees continues to underprice climate-related risk, and insufficient capital is being allocated to the green investments required to align the economy with the commitments made by the UK under the Paris Agreement.”
The letter calls on the bank to “unleash green investment” by adjusting its lending operations to provide cheaper capital to commercial banks for sustainable projects. The authors also want to see the BoE partnering with the new UK Infrastructure Bank to provide additional capital to support increased investment in a fair and green transition. They also want the bank to work with the Treasury to mandate all UK financial institutions to outline credible transition plans aligned with the Paris Agreement.
A report released earlier this year found that the UK financial sector funds activities responsible for emissions which are almost double Britain’s net total, and more than most other countries. The BoE’s corporate asset purchases are currently aligned with 3°C of warming, double the Paris Agreement target.
“After years of delay, it’s time for our public institutions to play their part in getting the City of London in order,” said Green party MP Caroline Lucas following the letter’s publication. “That’s why, alongside 50 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.
Current signatories to the letter include MPs from all major UK political parties and the letter remains open for parliamentarians to sign until October, when a full list of signatories will be delivered to the BoE.
This page was last updated September 16, 2021
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