Climate still part of BoE’s focus, Breeden says

January 15, 2024|Written by Moriah Costa|Bank of England

​​The Bank of England (BoE) will still focus on climate even as the UK government has removed climate from its list of key priorities, Environmental Finance has reported.

BoE deputy governor Sarah Breeden told the media outlet that climate was still part of the central bank’s responsibilities of maintaining monetary and financial stability.

“It is still clear that it is our responsibility to ensure we understand what climate change and the transition to net zero means for our objectives,” she told Environmental Finance.

Her comments were in response to questions about whether the BoE will continue to focus on climate change risks after UK chancellor Jeremey Hunt removed climate as a main priority in a letter sent to the BoE that sets out its remit.

The annual letter had included climate as a main focus in the last two years, starting in 2021 when the BoE’s mandate was updated to include “environmental sustainability and the transition to net zero”.

The UK government has been criticised for backtracking on its net-zero commitments, as it has put forward a new bill that would allow licensing for oil and gas exploration contracts. Meanwhile, the Climate Change Committee, which is tasked with advising the government on its emissions targets, has warned that the country is off track to meet its goals. The committee’s chief executive, Chris Stark, announced on Thursday that he was resigning as an MP in protest at the government’s stance on green policies.

The central bank still plans to work on understanding how banks and insurers manage climate risk, as stress tests showed that UK financial institutions “have an enormously long way to go in order to build these capabilities”, Breeden said. Still, the BoE reduced its spending on climate-related research last year to focus on core operations.

When asked by Environmental Finance if the central bank planned to regulate and supervise financial institutions’ transition plans, she said such plans were not enough.

“It’s really important for their ‘real economy’ customers to have transition plans. In many respects financial institutions are customers of those plans, to help them know where risks are, where opportunities are, how to help finance the transition. That’s a broader agenda than just financial institutions, it’s an economy-wide challenge,” Breeden said.

This page was last updated January 15, 2024

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