Carney Says BOE Will Keep Polluting Industries in QE Program

  • Central bank governor doesn’t want to overburden policy
  • Bank has been criticized for buying from polluting industries

Bank of England Governor Mark Carney discusses public and private sector work on climate change ahead of the G-20 meeting. He speaks in an exclusive interview with Bloomberg's Francine Lacqua. (Source: Bloomberg)

The Bank of England Governor Mark Carney said he’ll maintain the status of polluting industries in the central bank’s bond buying program even though he’s worried investors aren’t doing enough to assess the risks of climate change.

The bank shouldn’t “overburden” monetary policy with rules that could restrict the kind of bonds that are included in a quantitative easing program to bolster the economy, Carney said in an interview with Bloomberg television on Thursday.

Carney talks to Bloomberg TV.

Source: Bloomberg

Almost half of Bank of England corporate bonds bought are from companies in manufacturing and utilities industries, even though they make up less than 12 percent of the economy. All together, those companies produce 52 percent of greenhouse gas emissions in the U.K., according to research by the London School of Economics and Grantham Research Institute on Climate Change and the Environment.

Conversely, renewable energy companies aren’t represented in the Bank of England purchases, though oil and gas companies make up 1.8 percent, the research showed.

Carney said there were no plans to review the bond buying program and that he had no plans to “make judgments” about policies on climate. 

“We just mimic the gilt curve. When we buy corporate bonds, the only restriction that we have is that an issuer has to have material activity here in the U.K.,” he said.

FSB Chief

In his role as chairman of the Financial Stability Board, Carney on Thursday published recommendations for investors and companies on how to be more transparent about risks they may face from the growth of low carbon goods and services, that could harm investments in highly polluting industries.

Carney said he was worried investors aren’t doing enough to assess climate risk and the recommendations from a taskforce of industry experts encourages companies to include scenarios in their financial reports showing how they could be affected by climate change in the longer term.

“Who’s going to win, who’s going to lose, who’s going to benefit who’s going to be penalized? If I’m allocating capital, I want to know. I want to have that information to make those judgments,” Carney said.

Michael Bloomberg, founder and majority owner of Bloomberg News and its parent company Bloomberg LP, was appointed to lead the 31-member panel, which also includes executives and advisers from a variety of industries around the world.

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