Central Banks

Bank of England Bank of England

The Bank of England (BoE) was one of the first central banks to warn about the threat of climate-related risks to the financial system, and has since taken steps to incorporate climate considerations into its monitoring and supervision. Under governor Andrew Bailey, its climate role has grown still further, armed with a new mandate to support the UK’s transition to net zero.

Climate action

  • The BoE has overhauled its corporate bond purchase scheme to favour climate-friendly companies

  • The BoE has disclosed its climate-related financial risks, including its own balance sheet

  • The BoE is undertaking a climate stress scenario exercise, with the first results due to be published in 2022

  • The BoE is considering recalibrating its capital framework to better reflect climate risks

Climate inaction

  • The BoE’s adjustments to its corporate bond purchase scheme were said by academics to have a ‘negligible’ impact

  • Although the BoE is reviewing its capital requirements, its current framework may not account for the complex features and dimensions of climate risk

  • The BoE has not yet included climate considerations in its collateral framework

Andrew Bailey, Governor of Bank of England

Andrew Bailey

Governor of the Bank of England

Term of appointment

16 March 2020 to 15 March 2028

Link to biography
Featured Story
March 4, 2022

Stiglitz calls for climate capital rules

Joseph Stiglitz has backed calls for capital rules to be adjusted in order to correct ‘pervasive’ market failures during the green transition.
Bank of England, Federal Reserve
Featured Story
Traffic tailights streaming past Big Ben and the Houses of Parliament
February 25, 2022

Fears over net-zero spending unfounded, say UK academics

The UK government can deploy the spending necessary to reach its net-zero goals, despite current debt-to-GDP levels being relatively high, according to new research.
Bank of England
Featured Story
Aerial view of a wind turbine
February 4, 2022

Task finance regulators with supporting climate goals, UK Treasury urged

Leading civil society groups have called for the UK’s financial regulators to be given a statutory objective to help meet the country’s climate commitments.
Bank of England
Featured Story
Oil and gas refinery at night
January 13, 2022

Impact of BoE green monetary policy plans ‘negligible’, say academics

A new study has cast doubt on the credibility of a key pillar of the Bank of England’s climate agenda. …
Bank of England

How the Bank of England stacks up

Rank Country Aggregate Score (out of 130) Grade (A+ to F) Research and Advocacy (out of 10) Monetary Policy (out of 50) Financial Policy (out of 50) Leading by Example (out of 20)
5 United KingdomUnited Kingdom 56 C 10 10 27 9

Central Bank/Supervisor

Bank of England and Prudential Regulation Authority

More info

Research & Advocacy

10 out of 10

High-impact

  • N/A

Medium-impact

  • Member of the NGFS

Low-impact

Monetary Policy

10 out of 50

High-impact

  • N/A

Medium-impact

Low-impact

Financial Policy

27 out of 50

High-impact

  • N/A

Medium-impact

Low-impact

Leading by Example

9 out of 20

High-impact

  • N/A

Medium-impact

  • N/A

Low-impact

What steps are missing in the Bank of England toolbox to address climate risk?

Civil society expects the bank to do the following:

  • Support a green and fair transition by greening its lending schemes; aiding investments in decarbonisation, such as through recycling finance from the Covid-19 response facilities into the National Infrastructure Bank

  • Coordinate with the Treasury and others to develop a fit for purpose institutional framework for a net zero transition, including a Green Finance Action Taskforce, development of public taxonomy (both green and dirty), and development and reporting on metrics of progress on shifting financial flows from dirty to green.

  • Fulfil its commitments to green its own balance sheet.

Latest News

News| December 4, 2023

UK chancellor’s remit letter to BoE downgrades climate change focus

The lack of climate change as a priority in the annual remit letter to the BoE has caused concern that green finance may no longer be a key focus of the Treasury. …
News| November 28, 2023

BoE’s Mann says climate change could increase inflation

Climate change will have an economic impact on countries, likely increasing inflation, and central bankers should be prepared, Bank of England policymaker Catherine Mann has said.
Opinion
News| August 1, 2023

Dual interest rates: unlocking green investment during monetary tightening

Higher capital costs mean low-carbon investments are at a disadvantage with higher interest rates, but a dual rate policy can solve that problem.
News| July 10, 2023

UK financial group asks government to give regulators a net-zero mandate

A report from the Aldersgate Group found that UK regulators face a number of barriers when it comes to implementing net-zero targets.
News| June 1, 2023

BoE will hold firm with climate plan, says Bailey

Governor Andrew Bailey pledges to continue Bank of England’s climate-related work, despite criticism from former officials.
News| April 28, 2023

Finance companies need to do more to address climate risk, says BoE’s Breeden

Financial companies need to do more to integrate climate risk into their decision making process, while accounting for economic and financial headwinds, the BoE executive director said.
News| April 12, 2023

Climate advocates support UK’s green finance strategy but say more must be done

Advocates note “the window for reallocating capital in line with a 1.5ºC transition is narrow, and current action is falling short”.
News| March 31, 2023

UK’s energy security plan ‘needs to be bolder’

The UK government’s energy plan lacks the additional funding that climate advocates claim is needed to maintain its status as a global climate leader. …
News| March 16, 2023

Bank of England to cut spending on climate research

The central bank will focus instead on core operations such as financial stability, markets and a digital currency.
News| February 21, 2023

What are climate-adjusted capital requirements?

Much discussed but not yet in force, climate-adjusted capital requirements are viewed by many as a key element in the bank regulation toolkit to address climate-related risks.

Latest Research

Facilitating the Transition to Net Zero and Institutional Change at the Bank of England

September, 2023

Perceptions of the Environmental Mandate and its Policy Implications within the British State

The Bank of England’s new environmental remit has not catalysed the bold change to monetary policy needed to meet net-zero targets, say political economists in this paper.

Written by The British Journal of Politics and International Relations

Climate-related Risks and the Regulatory Capital Framework

March, 2023

Gaps in the understanding of climate risks create uncertainty over capital requirements and macroprudential policy. This Bank of England report states that firms and regulators must improve their climate risk management.

Written by Bank of England

The Impact of Climate Change on Price Stability

December, 2022

Informed by central bankers, this literature review of climate change and inflation studies finds that climatic effects on prices already exist and that climate issues should be incorporated into monetary policy.

Written by E-axes Forum