The Bank of England’s (BoE’s) pioneering 2020 climate risk disclosure, published June 2020, revealed that its Corporate Bond Purchase Scheme (CBPS) is aligned with a dangerous 3.5°C of warming by the end of the century. This is far beyond the 1.5°C target of the Paris agreement. The CBPS almost doubled in size as part of the BoE’s pandemic expansion of quantitative easing and was valued in excess of £20 billion by August 2020.
This report, published by the New Economics Foundation (NEF) in collaboration with researchers from three British universities, shows how the BoE’s pandemic CBPS is heavily biased towards carbon-intensive sectors. An analysis of the list of eligible bonds reveals that sectors with a high contribution to emissions are over-represented. This over-representation is compounded when eligibility criteria are applied.
To correct this bias, two alternative purchasing strategies are outlined. First, a weak “lower-carbon” scenario involving the exclusion of high emission sectors and their replacement with green bonds. And a stronger “low-carbon” scenario which also excludes bonds issued by both utilities and carbon-intensive transportation.
The report is a companion to a similar analysis of the ECB’s Corporate Sector Purchase Programme by NEF and Greenpeace, which also found evidence of strong bias in favour of high-emission sectors.
This page was last updated April 22, 2021
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