Bank of England remit updated to include climate change

[LONDON] The Bank of England's mandate has been modified to reflect the fight against climate change, finance minister Rishi Sunak announced on Wednesday.

Mr Sunak revealed the updated remit of the BoE's monetary policy committee (MPC) in his annual budget, and in a separate letter to BoE governor Andrew Bailey.

The British central bank retains its key task, which is to use monetary policy as a tool to try and keep 12-month inflation close to a 2.0-per cent target.

"I am today updating the MPC's remit to reflect the government's economic strategy for achieving strong, sustainable and balanced growth that is also environmentally sustainable and consistent with the transition to a net zero economy," Mr Sunak wrote in the letter.

In response, the central bank said in a statement that it would provide more information in the coming months about proposed adjustments to its corporate bond purchase scheme to account for the so-called "climate impact" of bond issuers.

The bank will then seek to adapt "our approach by the time of our next scheduled round of reinvestment operations" for the bank's bond-buying scheme in the fourth quarter of 2021.

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Mr Sunak meanwhile confirmed Wednesday the launch of an Infrastructure Bank with £12 billion in capital.

The lender will be formed to finance projects in the green economy, focusing on areas such as carbon capture and renewable energy.

The news comes ahead of COP26, the UN's global climate change summit, which will be held in Glasgow later this year.

Britain's government is seeking to reach net zero carbon emissions by 2050 to help meet its commitments under the Paris climate accord.

AFP