Bank of England slips behind on climate ahead of COP26

An updated COP26 edition of its Green Central Banking Scorecard, which ranks G20 countries on the green policies and initiatives of their monetary and prudential authorities, has seen the UK slip from 4th to 5th place since the first edition was published in March this year, overtaken by the European Union.

Despite last week’s announcement that the Bank of England may be changing course on the use of capital rules to regulate climate-related risks in the financial system, researchers found that the Bank has been too slow to implement green policies, despite receiving a new mandate to do so from politicians. The UK’s central bank failed to keep up with the European Central Bank, which outlined its climate strategy earlier this year and is now moving towards stronger measures such as restrictions on banks’ portfolios, as well as climate capital rules.

David Barmes, senior economist at Positive Money, said: “The slow progress from central banks is deeply troubling ahead of crucial climate talks where finance is supposed to be a key focus. Policymakers remain stuck in the “data-gathering” stages, when what the twin crises of climate and ecological breakdown require is rapid action.

“It is worrying to see the UK, as host of COP26, slip behind when we should be showing leadership. When you consider that the UK financial sector is responsible for more greenhouse gas emissions than the UK itself or even the whole of Germany, the Bank of England simply cannot afford to sit idle.

“As the host of COP26, the UK is uniquely placed to lead the way with ambitious, high impact policies. As regulator of our financial system, the Bank of England must use its considerable powers to bring UK finance in line with the 1.5C target the British government is committed to.”