MPs have criticised the Bank of England for providing finance to large businesses without imposing environmental conditions.
The Environmental Audit Committee (EAC) has written a letter to the Governor of the Bank of England, Andrew Bailey, urging the central bank to align its corporate bond purchasing programme with the goals of the Paris Agreement.
Failure to do so could undermine the UK’s diplomatic leadership on climate change ahead of hosting UN climate change conference COP26 in November, the committee argued.
In future the Bank should also require large companies receiving millions of pounds of taxpayer support via its Covid Corporate Financing Facility (CCFF) to publish climate-related financial disclosures, the letter said.
Such disclosures should be in line with the recommendations of the international Taskforce on Climate-related Disclosures (TCFD) and the UK Government’s own Green Finance Strategy.
“We are at a crunch point not only to mitigate the effects of climate change, but to rescue vast swathes of the economy from the impacts of successive lockdowns due to coronavirus,” commented Conservative MP and EAC chairman Philip Dunne.
“It makes sense to tackle both together, offering a ‘reset button’ to design an economy fit for net zero Britain.”
He added: “The Bank’s corporate bond purchases are currently aligned with a catastrophic 3.5 degree temperature rise by 2100 — far exceeding the Paris Agreement goal of limiting global warming to 1.5 degrees celsius.
“We are calling on the Bank to show leadership, once again on climate change, in the year the UK hosts COP26, by ensuring its actions to promote recovery also reduce the UK’s exposure to climate change risk.”
In response, the Bank stressed its commitment to reducing its impact on the climate and said it would reply to the MPs in due course.