The independent external group of experts commissioned by John McDonnell MP, Shadow Chancellor of the Exchequer, has today published their report and recommendations on the UK finance industry and climate change.

The report authors found that:

UK banks’ fossil fuel financing during the period 2016-2018 was more than US$100 billion

Financial institutions allow high-carbon companies to access the stock market at a low cost

Some companies, such as Aviva, have reduced their holdings linked to coal and the Bank of England has taken steps to address the “implicit carbon bias” in its operations

But existing private sector approaches to “Environmental, Social and Governance” considerations suffer from significant shortcomings that open the door to ‘greenwashing’

Among other recommendations, the authors say that:

Firms, including banks and ‘shadow banks’, should be forced to publish the climate-related risks associated with their financial assets

The Bank of England should change the way it conducts monetary policy operations to avoid carbon bias

Large banks should be penalised for involvement in so-called ‘brown’ investments using the ‘Basel III’ regulations

Commenting, Labour’s Shadow Chancellor, John McDonnell MP, said:

“I want to thank the academics and finance experts who contributed to this important report.

“It’s clear there is a long way to go before the finance sector is pulling its weight to achieve the rapid changes our economy needs to meet our climate obligations.

“Labour will consider these findings and recommendations carefully and bring forward our own proposals ahead of the General Election.”

Ends

Notes to Editors: