The Environmental Audit Committee (EAC) urges the Bank of England to ensure future actions to promote economic recovery from coronavirus will reduce the UK’s exposure of climate risk.
Following the EAC’s evidence gathering as part of its Greening the post-Covid recovery inquiry, the Committee has written to Governor of the Bank of England, Andrew Bailey and pressed him to ensure that the Bank’s corporate bond purchasing programme is aligned with the goals of the Paris Agreement.
Failure to do so could undermine the UK’s diplomatic leadership on climate change ahead of hosting COP26 in November.
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.
These 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.
Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said, “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.
“It makes sense to tackle both together, offering a ‘reset button’ to design an economy fit for net zero Britain.
“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.
“I have written to the Governor of the Bank of England encouraging the Bank to take two further steps in supporting the green recovery.
“It has a moral responsibility to align its corporate bond purchasing programme with the goals of Paris Agreement; and it should require companies receiving millions of pounds of taxpayers’ money to publish climate-related financial disclosures.”