BoE unveils plans for greener corporate bond portfolio

Written by Adam Cadle

21/05/2021

The Bank of England (BoE) has unveiled plans to make its corporate bond purchase scheme (CBPS) more 'green' as the UK government aims to achieve net zero carbon emissions by 2050.

In a speech given in London on Friday, BoE markets executive director Andrew Hauser said the bank is to set targets for the overall emissions of its holdings, as well as investing in green corporate bonds when they are available. It is aimed to be an incentive for investors to do the same.

Although the BoE will not immediately sell-off bonds issued by businesses that have high carbon emissions, such firms will have a mandatory requirement to disclose emissions and must set out a roadmap to reduce them, or risk no longer being eligible for bond purchases.

“Today marks the start of an intensive period of learning,” Hauser said.

“Reducing global CO2 emissions won’t happen easily or on its own. Divestment is a powerful tool, and should remain squarely in the toolkit. But it should be used as a credible threat to reinforce incentives, not an indiscriminate 'quick fix'. The precise calibration of this approach will be developed in the coming months.”

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