The approach taken by the Bank of England (BoE) towards decarbonising its monetary policy lacks ambition, according to this paper from a group of academics led by the New Economics Foundation.
The study examines the BoE’s plans to apply a green tilt to its corporate bond purchase scheme, and finds it is likely to result in only a negligible reduction in the average emissions intensity of the portfolio. It says the BoE risks missing its own target of a 25% reduction by 2025.
The paper describes the current plans as a missed opportunity, and a failure to live up to the BoE’s new environmental mandate given to the bank by chancellor Rishi Sunak in 2021. The paper offers a series of proposals it says would help the BoE “genuinely lead by example” on decarbonising monetary policy.
These include beginning to exclude fossil fuel companies and applying a stronger tilt to its portfolio. The authors say combining both options would reduce the carbon intensity of the corporate bond purchase scheme by 39%, allowing the bank to achieve its 2025 target right now instead of waiting three more years.
This page was last updated April 13, 2022
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