Governor Andrew Bailey reiterates central bank's 'strong commitment' to net zero as he seeks to fend off criticism from green groups
Bank of England Governor Andrew Bailey has promised to consider including climate change as a factor in the central bank's corporate bond purchase decisions once the worst of the coronavirus crisis has passed, as he reiterated the Bank's "strong commitment" to the UK's net zero goal.
As part of its climate risk disclosure efforts, the Bank revealed last month that parts of its investment portfolio are currently aligned with a global warming trajectory of around 3.5C by the end of the century, far above the goals of the Paris Agreement.
In a statement yesterday, Bailey indicated he had received comments from the public "concerning the implications of the Bank's policies during the Covid crisis, including the issue of resetting the benchmark for the Bank's purchases of corporate bonds".
It follows criticism of the Bank for its failure to attach 'green conditions' to many of the business support loans it offered to companies to help them through the economic crisis spurred by the coronavirus outbreak, although such lending is separate to corporate bond buying.
Among recipients of Bank of England support, UK airlines received £1.8bn in loans, while a number of oilfield and automotive companies also received multi-million pound bailouts, it revealed last month - although none of the loans placed any climate or environmental requirements on firms.
Bailey yesterday conceded the Bank's lending to companies as part of the emergency response to Covid-19 "has not incorporated a test based on climate considerations", but insisted "this was deliberate, because in such a grave emergency affecting this country we have focused on the immediate priority of supporting the jobs and livelihoods of the people of this country".
However, he promised to look again at incorporating climate change considerations when deciding which corporate bonds the Bank buys in future, having previously indicated prior to the lockdown that there may be a need to better align climate targets with the Bank's corporate bond activities.
"We believe that the Bank's duty to the people of this country requires such a difficult choice to be made, but it will not change our commitment to the goals of countering climate change," Bailey argued. "Likewise, when the pressure on our resources abates, we will turn to important issues such as the benchmark for our corporate bond portfolio."
Separately today, meanwhile, the government announced it had agreed a support package - through to be in the region of £30m - for struggling Celsa Steel, which it said included unspecified requirements for the firm on protecting jobs, climate change and "net zero targets".
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