A leading coalition of environmental groups is demanding more climate crisis action from the Bank of England. This call to action comes exactly ten years after a landmark speech by then-Governor Mark Carney. Carney famously warned of the “tragedy of the horizon” in 2015. He argued that short-term thinking prevents addressing long-term climate threats. Now, groups like Greenpeace and WWF say the Bank’s response has been insufficient.
Therefore, the coalition includes ten major campaign groups and think tanks. Together, they have published a new briefing paper. This document urges Threadneedle Street to commission a fundamental review of monetary policy. They believe the current approach is outdated. Specifically, it fails to handle climate-related economic shocks effectively. For example, droughts and floods can suddenly spike food prices. Consequently, the Bank’s traditional response of raising interest rates can be counterproductive.
Furthermore, this demand for climate crisis action highlights a significant problem. Higher interest rates increase borrowing costs. This makes the massive public investment needed for green transition much more expensive. The briefing states the UK’s recent inflationary crisis was triggered by fossil fuel prices. It argues the Bank’s policy tools were “ill-equipped” to deal with this reality. Therefore, a new strategy is essential.
The campaigners propose several specific changes. First, they want the Bank to reflect climate risks in banks’ capital requirements. Second, they suggest discounting fossil fuel assets used as collateral for loans. The European Central Bank already plans similar measures. These steps would make fossil fuel investments less attractive. Ultimately, this would encourage a shift toward renewable energy.
A Bank spokesperson responded to the demands. They acknowledged that climate risk is part of the Bank’s remit. The most recent Monetary Policy Report also mentioned climate change. It noted extreme weather as an “upside risk” to inflation. However, the campaigners want more proactive climate crisis action. They feel the current efforts are not enough to ensure financial stability.
Interestingly, Mark Carney, who sparked this debate, is now Canada’s Prime Minister. His policies have shifted significantly since his 2015 speech. He recently cancelled Canada’s carbon tax. He also supports ramping up national gas production. This contrast underscores the complex political challenges of climate policy. The UK’s Labour government has pledged to empower the Bank to consider climate goals again. The world is watching to see if words turn into decisive action.
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