Research and campaign group Positive Money is today launching a new report calling for the Bank of England to be given a new mandate and set of tools to actively promote the transition to a low-carbon economy.
‘A Green Bank of England: Central Banking for a Low-Carbon Economy’ assesses the central bank’s monetary policy framework from an environmental perspective. It challenges the Bank’s record on climate sustainability and concludes that reform of its mandate is necessary to meet the economic challenge posed by climate change.
The report breaks new ground by looking at climate change through the lens of investment as well as financial stability. It makes a number of macroprudential and monetary policy recommendations to reduce the financing of fossil fuels, decarbonise the financial sector, expand investment in green sectors, and increase the coherence of the Bank of England’s climate policy positions.
Among the recommendations:
- the Bank of England should disclose the carbon risk of the assets on its own balance sheet, and should no longer buy bonds issued by fossil fuel companies via its QE programme;
- the Treasury, in concert with the Department for Business, Energy and Industrial Strategy, should review the Bank’s monetary policy framework through the lens of the impact of climate change on the UK economy and consider changes to the Monetary Policy Committee’s mandate;
- the Bank should consider how overt monetary financing (often referred to as ‘QE for People’) could be utilised to drive green and sustainable investment in the UK.