Friday 5 June 2020 12:03 pm

BoE governor Andrew Bailey: Fiscal stimulus should keep climate change in mind

Bank of England governor Andrew Bailey has said stimulus packages from governments to tackle the coronavirus fallout should improve sustainability so as to help tackle climate change.

In an opinion article with former governor Mark Carney and other central bankers, Bailey said countries should “build back better” after coronavirus, with green goals in mind.

Yet campaign group Positive Money criticised the Bank, which has been supporting airlines, chemicals firms and other polluters throughout the crisis.

Figures released yesterday showed it had handed out £1.8bn to airlines and £750m to oil firms with no green strings attached through its corporate financing facility.

Writing in the Guardian, Bailey and Carney urged said financial decisions made now must take climate change into account. That includes decisions by “businesses, investors, banks and governments”.

“The economic recovery plans being developed today offer the chance to build a sustainable, competitive new economy,” they wrote.

The other writers of the opinion article were Francois Villeroy de Galhau, governor of the Bank of France and Frank Elderson, chair of the Network for Greening the Financial System (NFGS) and board member of the Netherlands’ central bank.

Calls for Bank to exclude fossil fuel firms

“Following the global financial crisis, only a fraction of fiscal spending improved sustainability,” they wrote. 

“This time, governments’ stimulus packages can be more ambitious.” They pointed to some governments and firms which for “are already accelerating the transition to clean energy, retrofitting homes and buildings, and linking financial support to climate-related conditions”.

They said the Network for Greening the Financial System, a group of central banks and supervisors, will soon publish a set of climate reference scenarios. They are likely to lay bare the catastrophic effect climate change could have on the financial system.

Yet Positive Money chair said the Bank of England must live up to the climate change values it espouses. 

“As a start the Bank of England must exclude fossil fuel companies from its corporate QE programme,” she said. 

She added that it should “consider what climate conditions could be attached to its corporate bailout scheme”.