LONDON (CU)_The financial sector of the United Kingdom can no longer turn a blind eye to the global crisis of climate change, as the Bank of England has begun to persuade the industry to limit climate-related risks and accelerate investment to reduce harmful emissions.
Participating in a Bank of International Settlements conference on Thursday (3 June), the a Bank of International Settlements conference on Thursday (3 June), the Bank of England Governor Andrew Bailey revealed that for the first time, the bank’s Monetary Policy Committee recently discussed the economics of climate change, emphasising the United Kingdom’s commitment to slash emission and achieve carbon neutrality. “When it comes to climate change, we cannot stand still,” he said. “We need to continue to be bold and learn from our work so far to deepen our understanding and inform future actions.”
The Governor also expressed his concern over the fact that the failure to act could spark inflation thereby prompting the need for a bigger adjustment in the years ahead. “There is increasingly persuasive evidence that emissions, and so climate risks, are systematically under-priced in financial markets,” he said. “This means that continuing to replicate the structure of the sterling corporate bond market, without taking explicit account of the climate impact of bond issuers, is no longer in fact a truly ‘market neutral’ approach.”
He noted that the central bank of the United Kingdom is committed to reducing emissions from its physical operations in order to ensure that the BOE’s operations are consistent with the target of achieving carbon neutrality by mid-century.
Meanwhile, the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, is expected to launch a forum next week, which is aimed at encouraging companies to reveal details regarding their environmental risks to investors.
The BOE Governor’s remarks, as well as the BIS conference are a part of a global effort to build momentum for climate action ahead of UN Climate talks (COP26) scheduled to be held in Glasgow in November.
