Greening our Corporate Bond Purchase Scheme (CBPS)

We will adjust the CBPS to support an orderly economy-wide transition to net zero, subject to maintaining its primary monetary policy purpose, protecting public money, and basing any adjustments on robust and proven metrics.

Incentivise companies to achieve net zero

 Lead by example,  learning from others 

Ratchet up requirements over time

1. Incentivise companies to take decisive action to achieve net zero:

We want firms whose debt we might hold to change their behaviours in meaningful and lasting ways that support orderly transition to net zero by 2050 - not simply to minimise the current climate footprint of our portfolio. Exclusions or divestments will be part of the toolkit, but only where they incentivise that transition; 

2. Lead by example, learn from others:

Given the relatively small scale of the CBPS, we will work closely with others in designing our approach: drawing on the work of relevant market-wide initiatives; seeking to influence that thinking where appropriate; and illustrating how comparable investors might approach similar challenges; and

3. Ratchet up our requirements over time

As data and metrics on transition pathways and firm-level emissions improve, and issuers have the opportunity to develop credible net zero strategies, our approach will become progressively more demanding, setting higher expectations and sharper incentives.

Figure 2.4: Escalation of expectations and actions over time

  1. This metric normalises a firm’s greenhouse gas emissions by its revenues (to capture the volume of emissions it produces for its size, rather than how large a company it is), and then weights these together using the (current value) share of each firm in the overall CBPS portfolio. It is expressed in terms of the volume of carbon dioxide equivalent emissions per million pounds of revenue. Our target is set on the basis of so-called Scope 1 and Scope 2 emissions. This means that it captures both the emissions produced directly by a firm and in the production of the energy that it uses, but not the emissions associated with either the production of its other inputs or the use of its own outputs (which would be Scope 3).

  2. A voluntary network of central banks and supervisors which aims to contribute to best practice in managing environmental and climate risks in the financial sector, and mobilising finance in support of a sustainable economy.

  3. The green swathe is based on a range of science-based emissions reductions pathways consistent with limiting global temperature increases to the 1.5°C goals of the Paris Agreement. These are also consistent with achieving net zero CO2 emissions by 2050, but do not reach zero by 2050 because they also include other greenhouse gasses. The UK Government’s net zero commitment does cover all greenhouse gasses, as therefore do our own CBPS targets.

  4. Department for Business, Energy & Industrial Strategy – Mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs Opens in a new window

  5. Subject to a sufficient number of firms in a sector self-reporting data for this to be practical.

  6. Department for Business, Energy & Industrial Strategy – Mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs. Opens in a new window

  7. Greenhouse gas emissions on a Scope 1 plus Scope 2 basis.

  8. Energy mix refers to having at least 20% of output or capacity from renewable sources.

This page was last updated 31 January 2023