Bank of England governor says green finance has 'much further to go'

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Bank of England Governor Andrew Bailey speaks at the Financial and Professional Services Address, previously known as the Bankers dinner, at Mansion House in London, Britain July 1, 2021. Stefan Rousseau/Pool via REUTERS
Bank of England Governor Andrew Bailey speaks at Mansion House in London, Britain, 1 July 2021. Photo: Stefan Rousseau/Pool via REUTERS

Bank of England governor Andrew Bailey said that the central bank had reached a series of "pivot points" on climate change, but there is "much further to go" in many respects for the financial system. 

Speaking at the COP26 climate summit in Glasgow, Scotland, Bailey noted the growing importance of climate awareness in our everyday lives filtering through to central banks. 

He also said the bank would move from an enabling approach to actively overseeing change required in these firms.

The climate crisis "has touched all areas of our organisation – from the way we heat our buildings, to the way that we manage our holdings of corporate bonds for monetary policy purposes," he said. 

"It is included in all of our remits and embedded in all of our decision-making processes."

Outlining the pivot points further, Bailey said that the bank had "seen a step change among senior executives and boards at firms," and that some organisations were "exhibiting genuine ambition" in making steps towards net zero. 

Read more: UK ushers in $130tn in net zero commitments and new climate fund

Regulatory capital requirements will be a part of the bank's mission to green the UK economy.

Bailey also said the bank would move to bring climate onto the monetary policy committee's agenda as well as working with other countries in the G7 and G20. 

He ended his speech highlighting that the bank must use the "power of disclosure" for companies to incentivise change over an acceptable timeframe. 

The central bank has previously been criticised for its lacklustre action on the climate crisis.

In April, climate activists in London splashed black dye on the facade of the Bank of England's imposing neo-classical headquarters as part of a protest against the finance sector's support of what they say is a climate catastrophe.

Activists, some dressed as jesters, sprayed the dye at the building, known as "the Old Lady of Threadneedle Street", leaving black stains on the main entrance to the building. The protest was labelled as a "money rebellion". 

Nevertheless, the speech comes as UK chancellor Rishi Sunak outlined ambitious plans for the UK to become the world's first net zero-aligned financial centre.

The Treasury also said that, as COP26 continues, the UK will usher in climate commitments from private companies covering $130tn (£95tn) of financial assets on Wednesday's Finance Day at COP26. These are worth about 40% of the world's total financial assets.

These commitments will help to create a huge pool of cash that could fund the UK's net zero transition, including the move away from coal, the shift to electric cars, and the planting of more trees.

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