The global economy is already at risk of a major recession as a result of Covid-19. As the social and economic impacts of climate breakdown intensify, a humanitarian and environmental crisis also becomes a financial one, and our economies will face a further reckoning.
That means that climate change needs to be a top priority for the Bank of England not just because it is an existential threat for humanity, but because it is the Bank’s responsibility to ensure future financial stability. If high street banks continue to choose not to account for climate risk in their investments and operations, it is then up to the central bank to make it happen.
The Bank of England additionally needs to lead by example by rejecting fossil fuels in its own asset purchasing programs and collateral frameworks.
Unfortunately, commercial banks continue to finance emissions that will generate warming exceeding 4°C, pushing us past the limits of a habitable planet. If banks persist in pouring money into new fossil fuel development, we will not be able to stop the worst impacts of the climate crisis. Through their regulatory regimes and monetary policy operations, central banks can disincentivise banks from lending to fossil fuels, making it riskier and more expensive for them to do so.
The governor of the Bank of England Andrew Bailey promised to address climate risk both for the Bank’s own operations and as a supervisory authority. This promise has not yet become a reality. That’s why social movements need to keep reminding Bailey of his promise and hold him accountable to take immediate action, before it is too late.
Read what the Bank of England can and should do to address the climate crisis on our Solutions page.