Bank of England mulling more ambitious climate goals amid green push

Bank of England Credit: PA Wire/PA Images

The Bank of England has revealed it is looking at permanently cutting staff air travel as it mulls more ambitious climate change targets under a drive to “practise what we preach”.

Sarah Breeden, the Bank’s executive director for financial stability and risk and lead on climate change issues, said the Bank was having an “active debate” over plans to make goals on reducing its own carbon footprint more stretching.

Part of this could see the Bank cut back on policymaker trips overseas in favour of virtual meetings even once pandemic restrictions lift.

Sarah Breeden is set to replace Sir Jon Cunliffe as deputy governor for financial stability Credit: Bank of England/PA

It comes after the Bank recently beat its climate target nine years early as policymakers were unable to jet around the globe due to the pandemic.

Its second annual climate-related financial disclosures report showed that on one measure, the Bank’s carbon emissions plunged by 74%, smashing through its initial target to reduce its footprint by 63% by 2030, before reaching net zero by 2050.

Speaking to the PA news agency, Ms Breeden said: “We’ve learned in the pandemic that you can get a lot more done virtually than we ever thought possible.

“Going back to 2019 levels of travel shouldn’t be necessary, but the answer is not zero either.

“Our target is to reach net zero by 2050 at the latest, but we’re seeing if we can do more.”

She said the Bank was keen to lead by example as it puts climate issues at the heart of its policy, having been handed a new “green” mandate in this year’s Budget.

The Bank’s executive sponsor for climate change, who also sits on its Financial Policy Committee (FPC), said the Bank’s recent move to make its £20 billion corporate bond portfolio more green was part of a drive to “practice what we preach”.

The Bank has said it will set targets for the overall emissions of its holdings and invest in green corporate bonds where possible.

It has also recently unveiled its first ever climate change stress tests, which will scrutinise the resilience of Britain’s biggest banks and insurers against global warming risks over the next 30 years.

But the Bank has come under fire from sustainable economy campaign group Positive Money for not going further and linking the tests to the capital that banks and insurers must hold on their balance sheets.

Ms Breeden said while the Bank’s role is “not to take companies to task”, it may look at capital requirements once past the exploratory first step, given that “capital reflects risk”.

But she stressed the “case has not been made yet” for capital requirements and that choosing where and how the costs of the net zero transition lands should lie with “elected politicians”.

The Bank’s green guru is on a mission to use the Bank’s influence as a force for good in addressing climate change issues in the financial sector.

While it may only have 6.5% of the sterling corporate bond market, it is important for the Bank to lead the way, she said.

“We have a small wallet but a loud voice when it comes to our actions,” she said.

The Bank setting itself more stretching net zero targets is another symbolic move and an important one as the United Nations Cop26 climate change conference in Glasgow approaches.

Chancellor Rishi Sunak is also banging the green drum with the conference on the horizon, just last week announcing the first green savings bond for consumers that will support environmentally friendly projects.

Ms Breeden said while it is vital that the financial sector needs to play its part in achieving net zero emissions, “we all need to change”.

“The financial system has got a really important job in helping us get there, but it’s an economy-wide transition,” she said.