Andrew Hauser: It's not easy being green - but that shouldn't stop us - how central banks can use their monetary policy portfolios to support orderly transition to net zero

Speech by Mr Andrew Hauser, Executive Director for Markets of the Bank of England, at Bloomberg, 21 May 2021.

Central bank speech  | 
21 May 2021

Introduction

I am delighted to be with you here today to launch our Discussion Paper on greening central bank asset portfolios. The Paper sets out our analysis and proposals in detail. I want to use these remarks to explain why we are doing this, covering four main topics:

– First, why achieving net zero requires action from everyone, including central banks;

– Second, how a clarified remit, coupled with market mispricing of climate risk, gives the Bank the green light to adjust the composition of our Corporate Bond Purchase Scheme to support net zero in ways that don't compromise its monetary policy goals;

– Third, why those adjustments should aim to improve firms' incentives for delivering net zero, not simply minimise the current carbon footprint of the Scheme; and

– Fourth, how we will turn our words into action, starting with the next scheduled reinvestment operations this autumn.