QE and climate considerations  A second aspect of QE that has received close external scrutiny is its relationship to climate change. Responding to climate change is a strategic priority for the Bank; we continue to work towards promoting safety and soundness by enhancing the Prudential Regulation Authority (PRA)’s approach to supervising the financial risks from climate change, and towards enhancing the resilience of the UK financial system by supporting an orderly market transition to a low-carbon economy. In particular we have supported the Financial Stability Board’s work on climate disclosure through the Task Force on Climate-related Financial Disclosures (TCFD). To show its commitment last June the Bank published a report disclosing for the first time its own approach to climate risk management for all its operations.26  Attention, however, has understandably focused on the £ corporate bond purchases that form part (around 2%) of our QE programme, and whether more should be done to account for climate considerations in these holdings. Our approach to date has been to invest in sectors in proportion to the total outstanding eligible issuance accounted for by each sector in the UK economy.27 An important part of the design of the CBPS back in 2016 was to achieve the MPC’s aim of imparting monetary stimulus in a way that was sector-neutral, consistent with the remit given to the Committee by the Chancellor. As a result, the carbon footprint of the APF Corporate Bond Purchase Scheme (CBPS) portfolio is broadly representative of the sterling investment grade corporate bond market (Figure 7).
The high degree of uncertainty militates against ambitious fine-tuning of the economy but favours focusing on the main task of monetary policy, which is maintaining price stability. Moreover, uncertainty necessitates broad-based and impartial analysis as well as judgment and flexibility in monetary policy decision-making. BIS Review 5/2008  1