More than 50 MPs and peers from across Britain’s main political parties have called on the Bank of England and Treasury to coordinate their activities and seize the unprecedented opportunity to reshape finance and support a‘build back better’ recovery. Their move was prompted by NEF research with Positive Money and academics. In a letter to the governor of the Bank of England, Andrew Bailey, MPs recommend that the Bank of England works closely with the Treasury to steer billions of pounds of finance away from risky fossil fuel investments and towards green, job-creating alternatives.
In the run-up to COP 26, the letter is timely given UK banks poured £225bn into fossil fuels since the 2015 Paris Climate Agreement was enacted – with Barclays leading the way, as the ‘dirtiest’ bank in Europe. The City of London is the biggest centre of coal finance in Europe: just five of the major UK-based banks provided $56 billion of support to companies on the Global Coal Exit List between October 2018 and October 2020. And in 2019, UK banks provided more than $258bn in financing to sectors that the government and scientists agree are primary drivers of biodiversity loss.
The signatories warn that environmental breakdown threatens the Bank’s ability to reach its core objectives, and urge the Bank of England and Treasury to act “in a manner commensurate with the scale and urgency of the challenges we are facing”.
The Bank of England has been a thought and action leader when it comes to fighting climate change – and it should continue its excellent work through the actions it takes. But it can’t go at it alone, fiscal policy and environmental regulation must take the lead.
The letter is right to call on the Bank of England to “work closely with bodies such as the Treasury, BEIS, and the Climate Change Committee, and develop real economy targets such as on green job creation and emissions reductions”. This will allow for a richer and more open conversation about how to seize some of the opportunities of transitioning to a low-carbon economy, as well as how to deal with some of the inevitably tough decisions that lie ahead.