LONDON – Bank of England governor Andrew Bailey said Monday that it will next year test the exposure of Britain's commercial lenders to climate change risks, under an assessment delayed by coronavirus.
Bailey, speaking at a virtual summit on green finance, also defended the British central bank’s decision to try to help all virus-hit companies, including those that pollute the environment.
“When the pandemic hit, we decided to postpone the exercise in light of strain on firms’ resources,” he said in a speech on the opening day of the “Green Horizon Summit”.
The exercise, which will take place in June, will assess “three different climate scenarios, testing different combinations of physical and transition risks over a 30-year period” for UK lenders, he said.
“We need that same ambition in our approach to climate change” as the British central bank’s approach to the global financial crisis, Bailey argued.
The BoE has meanwhile faced criticism from some quarters for lending to high-polluting companies, such as airlines and chemical groups, during the Covid-19 emergency.
“These short-term interventions did not discriminate on the basis of climate change,” Bailey said on Monday.
“I believe that was the right response. In the face of such an emergency, in all conscience, it was not right to say to people that they would be denied a livelihood because their employment was of the wrong sort for the climate.
“But that does not mean that we have abandoned our commitment to tackle climate change and indeed the UK government has made a firm commitment to transitioning the economy to net zero by 2050.”
In a separate development at the summit, the Financial Conduct Authority regulator confirmed it would introduce a rule next year for prominent listed firms to disclose how climate change is affecting their business.
The rule – which will apply to major companies' reporting periods that start after January 1 – was confirmed by FCA chief executive officer Nikhil Rathi.
The green finance summit opened Monday on the same day that the UN’s next global summit on climate change, COP 26, was initially due to start in Glasgow.
That gathering was pushed back to November 2021 due to coronavirus. – AFP, November 10, 2020
