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Press release: 17 February 2021
The Environmental Audit Committee has published a report from its Greening the post-Covid Economic Recovery inquiry, for which ClientEarth gave evidence in September 2020.
It recommends that all Government and Bank of England bailouts and public support given during the Covid recovery be aligned with the UK’s climate objectives.
ClientEarth lawyer Jamie Sawyer said:
“The Environmental Audit Committee’s report makes clear that to ensure a resilient recovery from Covid-19, the UK’s economic and monetary policies must be fully aligned with its net zero goals.
“The Government’s recent support to companies – whether through a bailout loan under ‘Project Birch’ or loans to airlines with Government guarantees – have not been transparent and had no or limited climate conditions attached.
“For all future bailouts and public support, the Government and the Bank of England must require recipients to provide climate-related financial disclosures.
“But climate-related disclosures are not enough. They must attach legally enforceable conditions to public support that require a commitment to reach net zero by 2050, and a clear strategy to get there.”
The report also stresses that the UK corporate sector and financial markets must act to reduce their carbon intensity, and develop transition plans to reach net-zero that are aligned with the goals of the Paris Agreement.
“The Government must take progressive action to facilitate a well-managed transition to a net zero economy,” Jamie said.
“It must be a mandatory requirement, as an extension of soon-to-be mandatory Task Force on Climate Related Disclosures reporting, for listed companies to disclose a credible Paris-aligned strategy for how they will achieve net zero emissions by 2050.”
To transition the UK’s corporate sector towards net zero, the report outlines that the Bank of England’s Corporate Bond Purchase Scheme urgently needs reform.
“The EAC has stressed the grave need for the Bank of England to align its high-carbon corporate bond portfolio with the goals of the Paris Agreement. It is crystal clear that providing financial incentives to fossil fuel companies is completely undermining a resilient recovery,” Jamie continued.
“We need to see a rapid decarbonisation of the Corporate Bond Purchase Scheme – but the Bank of England has not committed to anything concrete yet. It should take action before the pre-COP summit in September, to show true climate leadership and encourage others to follow.
“As the Treasury will be setting its new remit and recommendations for the Bank of England in a few short weeks, we hope it will explicitly direct the Bank to consider and mitigate the impact that its monetary policy has on climate change.”
ClientEarth is a charity that uses the power of the law to protect people and the planet. We are international lawyers finding practical solutions for the world’s biggest environmental challenges. We are fighting climate change, protecting oceans and wildlife, making forest governance stronger, greening energy, making business more responsible and pushing for government transparency. We believe the law is a tool for positive change. From our offices in London, Brussels, Warsaw, Berlin and Beijing, we work on laws throughout their lifetime, from the earliest stages to implementation. And when those laws are broken, we go to court to enforce them.