The Bank of England Governor has doubled down on promises to carry out policies to help the UK shift to a net zero economy, but warned it was not regulators’ role to enforce change.
Central banks have started to outline plans to help steer the path for economies and financial systems as they transition to the goal of net zero.
Earlier this year Chancellor Rishi Sunak changed the BoE’s mandate to require it to support the shift to a net zero economy by 2050. But Andrew Bailey warned it was not the financial regulators’ role to force that change.
“The biggest component of the journey to net-zero rests not with central banks, but with government, through the delivery of sector-level climate policy pathways. Without these the real economy cannot adjust effectively,” Bailey said in a speech to the Reuters Responsible Business 2021 conference.
He said he wanted financial institutions to take better account of the risk climate change poses but it was too soon for the ban to link capital requirements explicitly to environmental criteria.
“As the prudential regulator, any incorporation of climate change into regulatory capital requirements would need to be grounded in robust data… In my view, the case for this has yet to be clearly established and possibly may never be,” he said. “But our work to improve climate disclosures, scenario analysis, and risk management, could help unlock such assessments.”
Earlier today a host of CEOs including Schroders’ Peter Harrisonc allied on the government to set clear global standards for recording their impact on the environment.
The business leaders backed a report, by UK charity ReGenerate, which outlines how the government can support and incentivise companies to step up during Covid-19 recovery, tackle climate change and stoke the government’s levelling up agenda.
“The world needs more purpose-driven companies which are dedicated to driving profits whilst benefiting society, because profit, people and planet are completely interwoven,” Harrison said.
There have been concerns the bank has regressed on the issue of climate change but in December Bailey reiterated his support for the week started by his predecessor Mark Carney.
“I reject any suggestion that we are not continuing to take climate change seriously,” he said at the time.