Rachel Reeves, the UK chancellor, at the World Economic Forum in January 2024. © World Economic Forum / Sandra Blaser
UK chancellor Rachel Reeves plans to reinstate climate change as a core focus of the Bank of England’s (BoE) remit, as reported by the Telegraph.
In a letter to BoE governor Andrew Bailey that will be sent on 14 November, Reeves is expected to put climate change as one of the central bank’s key priorities. Originally expected when Reeves released the UK budget on Wednesday, the Treasury announced it would send out its remit letters when Reeves gives a speech later this month.
The BoE cut back on its work on green policies after former chancellor Jeremy Hunt removed climate change as a core focus for the central bank. While Hunt left climate change risk as a core part of the BoE’s mandate, it was taken off the list of priorities, giving the BoE the ability to reduce its resources on climate, Bailey told a House of Lords committee on 14 February.
Bailey has said that while climate change is a risk to financial stability and the BoE needs to consider the risk, it’s not up to the bank to help “the world adjust” to climate change.
Reeves’ expected reversal is in line with the UK Labour party’s pledge to make climate a priority for the BoE, along with commitments to invest more in clean energy. In Labour’s first budget since its election victory in July, Reeves hiked taxes on private jets and extended incentives for electric vehicles and increased the rate of windfall tax on oil and gas companies. But she extended a 14-year freeze on fuel duty, which has made UK emissions 7% higher than they would have been without the freeze.
Daisy Jameson, policy fellow at the Grantham Research Institute, said Reeve’s expected decision is “a positive move for the UK’s financial stability in the face of a changing climate”.
Fran Boait, co-executive director at Positive Money, said she looked forward to the government following through on its decision, as the BoE has the tools to help with the green transition, but its failure to use them has caused it to fall behind other central banks. The UK fell from fifth to seventh place in the most recent Green Central Banking Scorecard which is produced by Positive Money.
“The chancellor must live up to her words to be the ‘first green chancellor’ by giving the bank clear direction to step up its work to support a green and just transition, and ensuring that the bank follows through on this,” Boait said.
This page was last updated November 4, 2024
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
