BoE trims back work on climate change

February 26, 2024|Written by |Bank of England

The Bank of England (BoE) has reduced the scope of its green policies after chancellor Jeremey Hunt removed climate change from his annual remit letter to the central bank’s financial policy committee.

BoE governor Andrew Bailey told a parliamentary committee that the central bank had reduced its climate-related resources to instead focus more on operational and cyber risks.

“We don’t have quite such a precise regard to sort of government policies in that area because they’ve taken them out of the list of the policies … we tried to slim it down in that sense and we’ve somewhat reduced our resources in that area as well,” he told the House of Lords economic affairs committee on 14 February.

While the remit letter still leaves climate change risks as a core part of the central bank’s mandate, it was left off the list of priorities for the first time in two years.

Bailey said the BoE would not ignore the financial stability risk from climate change but that it would review how it allocates resources.

“The depth and breadth of what we do will be trimmed back somewhat, we’ll focus on what I call core financial stability risks,” he said.

The UK’s commitment to green policies has come under scrutiny recently after the government backtracked on its net-zero commitments by putting forward a bill to license annual oil and gas exploration in the North Sea.

Ellie McLaughlin, senior policy and advocacy officer at Positive Money, said the news was a “huge misstep” for the central bank, especially since climate change risk still remains a core mandate.

“Whilst the government must urgently re-prioritise its green finance agenda, the bank should not be using the government’s backsliding as an excuse to do the same,” she said.

Lydia Prieg, head of economics at the New Economics Foundation, urged the chancellor to reinstate fighting the climate as a priority for the BoE during the spring budget. The government should also give the central bank and UK regulators a statutory mandate to work towards climate targets to prevent officials from suddenly changing their minds without the approval of parliament.

“During Andrew Bailey’s leadership, the Bank of England has lost its position as the global forerunner in addressing climate change – the government’s latest U-turn is unhelpful but ultimately no excuse to fall further behind,” she said.

This page was last updated February 26, 2024

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