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Bank of England's Bailey denies backsliding on climate crisis

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Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·5-min read
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Bank of England governor Andrew Bailey. Photo: Tolga Akmen/Pool via AP
Bank of England governor Andrew Bailey. Photo: Tolga Akmen/Pool via AP

The governor of the Bank of England has denied letting climate change drop down the agenda under his watch.

Andrew Bailey said he was “fully committed” to continuing the work started by his predecessor Mark Carney on the topic.

“I reject any suggestion that we are not continuing to take climate change seriously,” Bailey told journalists at a press conference on Friday.

Earlier in the week, the Bank of England was targeted by climate activists who sent out a fake press release pretending to be from the central bank. The statement claimed the bank would imminently stop buying fossil fuel-linked bonds. The stunt was intended to highlight action the Bank of England could take to address the issue of climate change.

READ MORE: Bank of England considers legal action over green bonds hoax

Jeff Walburn, the organiser of the hoax, said the Bank of England was targeted because it was “a role model for other central banks.” He said Bailey was not living up to his predecessor’s record on the issue of climate change.

“Carney was working hard towards some real changes, but Bailey benefits from that reputation without having to take the same strides,” New York-based Walburn, of activist group The Yes Men, said in an email interview this week.

From left: Chris D'Agostino, Jeff Walburn, and Andy Bichlbaum of The Yes Men activist group. Photo: The Yes Men
From left: Chris D'Agostino, Jeff Walburn, and Andy Bichlbaum of The Yes Men activist group. Photo: The Yes Men

Carney, who left the Bank of England in March, was vocal on the need to move the economy towards carbon neutrality. Under his watch, the Bank of England began looking at the risk climate change posed to the financial sector and he spoke frequently about the need for a reform. Carney took up roles advising the UK prime minister on climate change and as a UN envoy on the issue after leaving the Bank of England.

READ MORE: Bank of England told to 'put its money where its mouth is' on climate change

Ahead of Friday’s financial stability report, Walburn said the Bank of England had the chance to “make some strong changes and take real measures on climate.”

In the event, the report only mentioned climate change only in passing. This is part reflected the pressing twin issues of COVID-19 and Brexit, but the Bank of England found time to examine other less pressing issues such as stablecoins in the report.

At a press conference on Friday, Bailey said the Bank of England “have been and remain leaders in that field” of tackling climate change. He pointed to plans to conduct climate stress testing on the UK banking sector next year and disclosures made earlier this year about the bank’s own carbon footprint. He said the Bank of England was a “world leader” in that respect.

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READ MORE: Bank of England says UK banks can withstand COVID-19 and Brexit

A woman wears a face mask as she steps out of Bank underground station, in London. Photo: Alberto Pezzali/AP
A woman wears a face mask as she steps out of Bank underground station, in London. Photo: Alberto Pezzali/AP

Simon Youel, head of policy and advocacy at Positive Money, said the central bank was moving too slowly.

“Andrew Bailey claims that there is no ‘lack of leadership’ on climate action at the Bank of England, but nine months after he promised to make greening the Bank’s corporate bond purchases ‘a priority,’ we still haven’t seen the urgent reforms we need to catalyse a green transition,” Youel said.

Bailey said the bank was working towards overhauling its multi-billion pound bond portfolio but the effort was “complex.”

READ MORE: Bank of England head: Pension funds could be hit by 'worthless' fossil fuels

“It’s not a straightforward decision,” he said. “Some people seem to think that a) there’s a standard out there that we can just pick up off the shelf and put into effect b) that we’ll just dump a lot of bonds into the market and buy a load of other bonds.”

He added: “It’s not a matter of drawing a binary divide and saying you’re good and you’re bad, you’re saved and you're damned. It’s a matter of incentivising the change we want to see. But that’s obviously complex — we’ve got to get the right incentives.”

Mark Carney, former Bank of England governor Mark Carney, and COP26 Finance Adviser to Britain's prime minister. Photo: Tolga Akmen/Pool via AP
Mark Carney, former Bank of England governor Mark Carney, and COP26 Finance Adviser to Britain's prime minister. Photo: Tolga Akmen/Pool via AP

Youel said the Bank of England should follow the example of Sweden’s Riskbank. Last month the central bank said that from January it would only buy bonds “issued by companies deemed to comply with international standards and norms for sustainability”.

READ MORE: Bank of England Carney: Climate no longer 'niche' issue for investors

“The Bank of England is falling behind on climate, and needs to show global leadership in this field ahead of the UK hosting COP26,” Youel said.

“The work is underway on the question of the bond portfolio we hold,” Bailey said. “We’re doing that work ... I fully expect we’ll be coming out with more on that in the not too distant future.”

Walburn told Yahoo Finance UK he and three others spent several weeks planning the Bank of England press release hoax. His group, The Yes Men, have “other creative actions cooking,” although he did not elaborate on specifics.

READ MORE: 'Laughtivists' The Yes Men claim responsibility for Bank of England climate hoax

“Unfortunately, these powerful entities don't take action until the people compel them to, through sustained pressure,” Walburn said.

The Bank of England has not contacted The Yes Men despite threatening legal action, Walburn said.

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