The Bank of England has published an update to its climate transition plan, setting out how the central bank intends to align its operations with the government's target of net zero greenhouse gas emissions by 2050 and how it will manage the risks that climate change poses to its core functions.
The update reports progress against the commitments made in the Bank's first climate transition plan, published in 2024. The Bank's own operations — its buildings, its travel, its procurement — are on track to achieve net zero by 2035, and the carbon footprint of the Bank's physical operations has fallen by approximately 40 percent since 2019.
The more significant part of the plan concerns the Bank's financial operations. The Bank manages approximately £850 billion of assets, primarily government bonds held as a result of the quantitative easing programme, and the climate implications of those holdings are substantial. The Bank has committed to aligning its corporate bond holdings with the goals of the Paris Agreement and to using its influence as a shareholder to encourage the companies in which it invests to adopt credible transition plans.
The plan also addresses the Bank's regulatory responsibilities. The Bank supervises the UK's largest banks and insurers, and it has integrated climate risk into its supervisory framework. The plan commits the Bank to developing climate stress tests that will assess the resilience of the financial system to different climate scenarios, and to using its regulatory powers to ensure that the firms it supervises are managing climate risks effectively.
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