Lawmakers urge BoE to stop buying 'high carbon' bonds
February 26, 2021
Finance

Lawmakers urge BoE to stop buying ‘high carbon’ bonds

LONDON (UK) – The Bank of England should desist from buying bonds from businesses whose activities spur global warming, said a group of parliamentarians.

In 2020, the central bank doubled its holdings of corporate bonds to 20 billion pounds ($27 billion) in a bid to bolster the economy hit by the pandemic crisis.

Buying bonds of companies with high carbon emissions went against government goals to reduce global warming, said the House of Commons’ Environmental Audit Committee, which looks at public bodies’ impact on global warming.

“The Bank must begin a process of aligning its corporate bond purchasing programme with Paris Agreement goals as a matter of urgency,” the committee’s chairman, Philip Dunne, wrote to BoE Governor Andrew Bailey.

Although the parliament committee has no power over the BoE, finance minister Rishi Sunak could potentially alter the BoE’s remit to require a greater stress on environmental issues.

The nation will host the global COP26 climate summit in September and Dunne said the central bank should set a good precedent.

The bank would review its corporate bond holdings in July once the coronavirus pandemic is over, said Bailey, adding that the BoE was right to provide financial assistance to a wide range of businesses.

The central bank has sterling corporate bonds in proportion to the amount issued on markets.

This means 19% of bonds were issued by electricity firms, 6% by gas companies and 3% by other energy companies, while 11% were issued by industrial and transport businesses that are often energy-intensive too.

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