More than 100 leading figures from across finance, civil society and academia have signed a letter calling on the incoming Bank of England Governor, Andrew Bailey, to accelerate efforts to make Britain’s financial system greener, introducing mandatory disclosure, decarbonise monetary policy and penalise high-carbon lending. Signatories include:

  • Sir David King, SYSTEMIQ – senior scientific adviser to UBS, UK government Chief Scientific Advisor 2000-2007 and permanent Special Representative for Climate Change 2013-2017

  • Willem Buiter, Columbia University – former Citigroup chief economist and former external member of the Bank of England’s monetary policy committee

  • Rosalyn Schofield, CCC Adaptation Committee – Director of Company Secretariat at Associated British Foods

  • Adam Tooze, Columbia University – author of Crashed: How a Decade of Financial Crises Changed the World

  • Yanis Varoufakis, University of Athens – former Greek finance minister

  • Steve Waygood, Aviva

  • Michael Izza, Institute of Chartered Accountants in England and Wales (ICAEW)

  • Martin Shaw, Association of Financial Mutuals

  • Bevis Watts, Triodos Bank

  • Georgina Mace, UCL – CCC Adaptation Committee member

  • Keith Bell, University of Strathclyde – CCC member

  • Rebecca Willis, Lancaster University – UK Climate Assembly expert lead

  • John Barry, Queen’s University Belfast – UK Climate Assembly academic panel member

  • Benjamin Sovacool, University of Sussex – UK Climate Assembly academic panel member

  • Dale Southerton, University of Bristol – UK Climate Assembly academic panel member

  • William Blyth, Chatham House

  • Ben Caldecott, Oxford Smith School of Enterprise and the Environment

  • Bill McKibben – co-founder of

Civil society leaders who signed include:

  • Dr Jane Goodall – primatologist and UN Messenger of Peace

  • Paul Nowak – deputy general secretary of the TUC

  • Zamzam Ibrahim – president of the National Union of Students

  • Steven Croft – the Bishop of Oxford

  • Maggie Rae – Faculty of Public Health president

  • Jenna Hegarty – deputy director, RSPB

  • Father Damian Howard – Provincial Superior of the British Jesuits

The letter addressed to Andrew Bailey, co-ordinated by research and campaign groups Positive Money, the New Economics Foundation, Greenpeace, the SOAS Centre for Sustainable Finance and E3G, warns that measures taken by the Bank of England “are unlikely to be enough” to help the government meet its climate targets.

Outgoing Bank of England governor Mark Carney has cautioned that the financial system is currently funding an increase in global temperatures of more than 4C. In October 2019 Mark Carney told the Treasury Select Committee that “policy is not yet consistent with stabilising temperatures below 2°” and that “if you price the capital markets, all the assets are probably … north of 4°.

Signatories therefore urge Bailey, who will take over from Carney on 16 March, to use his position as head of Britain’s central bank “to lead the way” in aligning finance with the 1.5C target aimed for in the Paris Agreement ahead of this year’s COP26 summit in Glasgow. The letter calls on Bailey to take three specific steps towards this:

1. Making it mandatory for firms to disclose climate risk “as soon as possible”.

Disclosure of climate risk represents a crucial first step in decarbonising the economy, by illustrating the extent to which firms are exposed to climate change and allowing lending decisions to be adjusted accordingly. The Bank of England has begun making moves on this, asking companies to consider disclosing their climate-related risks. But with less than a decade to decarbonise the economy and meet climate targets, the letter calls for disclosure to be made mandatory “as soon as possible”.

2. Lead by example

Excluding fossil fuel assets from both future rounds of quantitative easing (QE) and the assets the Bank accepts as collateral. Research by the Grantham Institute at LSE found that the Bank of England’s £10bn corporate QE programme, launched in 2016, is heavily skewed towards high-carbon sectors. Under the programme the Bank has bought up bonds from fossil fuel companies including Shell, BP and Total. Signatories, therefore, call on Bailey to “lead by example” through ending the Bank’s implicit support for high-carbon assets by excluding them from future rounds of quantitative easing, as well as the assets it accepts as collateral. As the letter states, “This will send a powerful signal that holding these assets undermines long-term financial stability, and is incompatible with the Paris goals.”

3. Adjust Lending Framework

The letter also urges Bailey to consider adjusting the Bank of England’s macroprudential framework to discourage risky fossil fuel lending. This would mean the central bank applying the same tools it uses to manage risk in the mortgage market, increasing the amount capital banks need to hold against high-carbon loans to more accurately reflect the risk of such lending.

Wide Support for Action

Among the 101 signatories are UBS senior scientific advisor and former government chief scientific advisor Sir David King, ex-Citigroup chief economist and former Bank of England Monetary Policy Committee member Willem Buiter and primatologist Dr Jane Goodall, as well as three members of the UK’s influential Committee on Climate Change (CCC) and four expert advisers to the UK’s citizen Climate Assembly.

As chief regulator of the UK’s financial system, the Bank of England plays a key role in facilitating the huge re-allocation of capital required to meet the climate targets governments have signed up to through the Paris Agreement. Under Mark Carney, the Bank has begun to recognise the severity of the threat climate change poses to its responsibilities for economic and financial stability, warning that up to $20tn could be lost from stranded carbon assets.[6] However there are fears that the momentum needed to decarbonise the financial system may not be kept up by his successor.

The letter comes ahead of Bailey’s pre-appointment hearing in front of the Treasury Select Committee on Wednesday, which will be an opportunity for MPs to grill him on his suitability and plans for governing Britain’s central bank.

Fran Boait, executive director of Positive Money, said:

“The investments made by our financial system today determine whether we will be able to keep global temperature rises below the 1.5C upper safe limit. Finance is currently funding warming of more than 4C, which represents an existential threat not only to finance and the economy, but to life on earth.

“As the institution overseeing and underpinning our financial system, the Bank of England must lead the way and do everything it can to stop environmental breakdown being funded on its watch. With less than a decade to drastically cut emissions and avoid irreversible climate breakdown, Andrew Bailey must ensure that climate remains high on the Bank’s agenda. These steps are a necessary starting point.”

Frank van Lerven, senior economist at the New Economics Foundation, said:

“Climate risks pose a clear and systemic danger to the financial system but these risks are not fully reflected in asset valuations. Ensuring the financial system is fully resilient to climate related financial risks falls squarely within the mandate of the Bank, and must therefore be a top priority for new governor Andrew Bailey.

“Despite many positive steps in the right direction, policy action at the Bank is lagging behind the rhetoric. At present monetary and prudential operations are laced with a carbon bias – reinforcing climate-related financial risks and contravening the spirit of the Paris Climate Agreement. Leading by example and integrating climate risks into the Bank’s own monetary and prudential operation would sensibly be the first place to start.”

The letter and full list of signatories can be viewed here.