Climate change poses a “grave and growing threat to the financial system and macroeconomic stability”, wrote think tanks, academics and the CEO of sustainable bank Triodos in an open letter sent last week to Andrew Bailey, governor of the Bank of England (BoE), and Sam Woods, CEO of the Prudential Regulation Authority (PRA). They called on the BoE to take concrete steps to reduce climate-related risk.
The letter says the BoE can help mitigate risk by increasing capital requirements on the most climate-risky activities and assets to “break the finance-climate doom loop in which financial activities continue to fuel climate change and in turn increase risks to the financial system”.
