 Welcome everybody. This is your Parliament and it's fantastic to see you all here. It's a real delight to be joined by very special people on this table, including my three assessor, Baroness Lynn Fetholston and also the spokesperson in the House of Lords, the Liberal Democrats on sustainability and Korean Economics. We've got an economist here who in a minute is going to talk to his work and his report. Mae'n chefio'r rhannu, ac yn rheswbeth y rai fel Fun Yn Yn Ymwysgol. Mae'r gweithio'r gweithio i'r gwycau'r llef yr ydych chi'n gwysbeth a fydd yw gweithio'r gweithio. Rai fel hyn o'n gyffredinol i'r gweithio, mae'n gweithio'r gweithio'r gweithio'r gweithio, mae'n cael bod y maes i thbydd pwyso'r hawdd yn cael ei programmes yn enrych i gael mewn effordd daith. Rwy'n fawr am ymddangos bryd o'r Lord Devin, ac mae'r Prif Weinidog yn gweithio i'r Ffortrus Wedyl ni. Ac ysgolwch yr Ardal Gweithio Llywodraeth Cymru, rwy'n ddod o bryd i'r ffordd yn ysgriforth. Yn hynny'n gwneud hyn, rydyn ni'n fawr, mae'n fawr wedi bod y gweithio yw 10'r ysgriforth eisteddon o'r cyfnodol ysgriforth ar gyfer y dyna, ac o'r meddwl Llywodraeth Llywodraeth, rydyn ni'n afgathio yma. oherwydd gan y risoedd Llaiffyr, cyfnod rallwch ar gweithio'r trwysau dweud arweithio hanfroddol, a'r tarreg a'r banc hyfforddol, a'r banc ddechrau cwysig yn dechrau, ond mae'n fwy inferiora'r rhaid i ni'n companyfra agor. Ardal y llan ei gyn nhw, mae'n dweud a'r banc yn ceisio eu bobl yn gallu i'r bydd trwrs. Byddai mefyrdd a'r bai bwysig sy'n mynd i gweithioio gwybwyngol ar gyfer i gwasanaeth. That's why it's fantastic to have groups like Positive Money. There's two or three other all-party groups who are doing similar work on the financial services sector. But this is very novel, this work, because it actually tries to introduce sustainability and how we promote a more positive environment. That's why it's fantastic to have so many experts on sustainability and the environment. I want to talk carefully about how we put green economics at the heart of what we do. I'm very excited as a labour back venture that we're actually looking at some of those really difficult questions, for example on energy. Is it much better, which I think it is, to put more finance earlier into the sustainability questions on wind farms, for example, rather than necessarily looking at the extreme cost for doing away with nuclear waste, which we still haven't solved. I noticed in the weekend's papers that there's a love debate about what we do with nuclear waste, which of course is a big problem for us here and for those in the regions. So, with no further ado, friend, I'm going to stop so that others can start and just to say how fantastic it is to have this really groundbreaking work and to start thinking much more clearly about the importance of the green economy to all of our futures, to our children, and also to hopefully getting a more responsible financial sector. Thank you. Thank you very much. Thanks, Catherine. I'm the director of Pusted Money and I'd just like to invite if any of the speakers at just a road want to join the panel now. It's going to be in these a couple of minutes and then Rob. So decide if you want to sit there and I'll stay where you are. I think we've got everyone now. It's exciting. And I think the fact that we've got fantastic panel of speakers, it shows it really is a truly cross-party conversation, which is what it needs to be, the climate change of the Bank of England. Unfortunately, Michael Sheeran, who's a senior adviser at the Bank of England on green issues on climate change, couldn't be here today, but we've got a lot of expertise. And I just also want to thank Catherine for hosting. It is quite a radical conversation, but it's one that needs to be had. In October, we're expecting the UN to announce that we're going to be locked into 1.5 degrees global temperature rise by the 2040s. This will definitely have a devastating effect on food supply, on the whole planet, on our ability to access clean water and the ability to stop deadly diseases. So climate change is already underway. And we know to mitigate it or at least adapt. We need to mobilise finance. That's just a fact. Central banks sit at the heart of the financial system. Therefore, if we really want to transform our economy, then it makes sense that central banks have to be part of the conversation and actually have to lead the way. But the good thing is that the conversation is accelerating fast. I think the idea of launching a paper on the Green Bank of England even a year ago would quite frankly mildly absurd, but that just shows how fast things are changing. And I think that is because it's quite clear that the economic consensus of the last few decades is breaking down and previously kind of radical conversations are now becoming much more acceptable. And that's because people are understanding that we need to change fast. And we can no longer continue with our economic institutions that are essentially operating in isolation, so deciding priorities are continuing to do so. Those days are over. And I think also increasing openness does come from at least in part the political shocks that continue in economic decline. It's like trod, Brexit, increasing inequality and secular stagnation. And to top that off with obviously the threat of climate change. And just to finish on a kind of radical thought, the Bank of England was founded in 1694 to fight a war, essentially. And I think climate change is clearly the biggest challenge to a war of our time, so it needs to be considered. Thanks. And I'll hand over to Rob. Rob? Okay. Well, thank you very much for the introductions. And thank you very much for coming to hear about these two, well, the climate change and central banking to quite seemingly Congress topics. But of course I hope you're leaving today convinced that this is no way, in no way as a side issue, but rather a fundamental and very necessary rethink about how we make economic policy and shape our financial system in light of the climate crisis that we all face. And I'm very grateful that we're joined by elected policy makers today because although the Bank of England is independent, what central banking is and what it tries to achieve is really an outcub of political design. And the best of that design is the central bank in that way, which we'll see is at the core of what we're going to be proposing today. But I'll follow up with some of the remarks Brandon has made first and answer why and how should central banks care about climate change? Well, the case could be put in two arguments for you. The first has to do with financial risk. So the process is inherent to climate change. I'm really going to introduce new forms of financial risk in the economic system to expose the financial system to these new forms. Now that goes for physical damage from weather, like floods, which are called billions of plans worth of damage in the UK alone in recent years. But also the way society responds. So that goes for policy, which might put a tax on high-carbon editing firms. But also sudden changes in valuations and changes in the industry at new costs. And we call these kind of transition risks, which are going to influence the valuation of companies. And especially that second type of risk of transition risk really has the potential to be systemic because it affects companies all the way across the UK economy. So this is the proportion of companies in the UFICS in 100, some of the largest companies in the UK economy. And relatively high-carbon sectors. And we're looking at this because Bank of England Government Mark Carney actually pointed towards values in September 2015 as a reason to care about this risk government for central banks to be concerned that the risk of climate change might impact on financial stability. But unfortunately, that value has only gone up over time. That's mostly due to developments in energy markets, probably, unfortunately it's occurred. And that means that the size of these companies, the value of risk from transition risk, more value is tied up in companies that really expose this kind of transition risk. And the size of these companies echoes through the financial system. Because in the report, we collect the findings of several different NGOs which look at bank lending and show that banks are actually quite woefully unprepared for how this is going to impact the system. Because they're still making loans to projects that are going to have high carbon intensity. And they're going to be committed to those assets in several years' time when heat carbonisation really ought to be under way. But it's not just banks, it's also other kind of asset holders. So pension funds and insurance firms and actually the Bank of England itself. So the central bank ought to be taking steps to to mitigate this risk and reduce the exposure in the system to this kind of risk. And that's another argument that we use to say why essentially we actually care. And we call it the investment argument because it's fundamentally about investing in the low-carbon economy. We know that climate change is an enormous economic externality. So the costs that it imposes are on society and private actors that generate those costs don't really feel it so much. And that means that we see far less green investment than is socially optimal than we'd like to see. And that goes for resilience, like flood defences but also reducing emissions like renewables. And the shortfall between what we'd like to see and where we're actually at is called the green investment gap. And that's billions of pounds, trillions of dollars worldwide every year. And evidence, recent evidence figures show that in the UK over the past couple of years the investment in clean energy has fallen quite specifically. So this is really relevant to this country. And the investment argument says that the centre bank sits at the centre of the monetary advantage system and therefore has enormous resources at its disposal as we've seen over the past years. And therefore should really incentivise, push that system, help galvanise investment in low-carbon infrastructure. And so the Bank of England isn't actually unaware of all this. The bank has to be praised for bringing the climate issue to the attention of the central bank of the community internationally. As I mentioned, Governor Mark Carney has given several high-profile speeches on this since 2015 and much more. And the bank really needs on the research agenda in this area as well. But the problem is that the officials of the Bank of England still see the entire climate change issue through the lens of financial stability and race. So they focus on the race argument. And they actually really, if you get into conversation, they reject the investment argument as somehow political or partisan outside of their legitimate purpose. But we think that leaves several problems. So firstly, there's then no place for longer-run effects on the economy and the financial system. All the risks I've been talking about manifest are actually quite long time times. Longer than most policy makers are thinking under. And Governor Carney actually said this in himself in his 2015 speech that once climate change becomes a defining issue for financial stability, it may already be too late. He called this the tragedy of the horizon. And that tragedy is that we have the central bank, the Caesar's Rollers, protecting monitoring safeguarding system where all of those companies we just looked at are extremely exposed to risk. And we're going to compromise the long-run viability of not just the economy, but also our society and our planet. Financial stability then comes to look quite incoherent over time. But that's not the only kind of incoherence that the bank suffers from. Some great work by researchers at the London School of Economics showed that the corporate bond purchased you, which is part of the Bank of England's quantitative easing programme, has been skewed towards high carbon sectors. That's unintentional, and it's a product of the design of the programme. But it's relative to their contribution to the UK economy. High carbon sectors have benefited from bond industries because of the monetary policy. Now that means that monetary policy has been actively boosting these great companies that we've just heard from the financial stability concern are contributing to systemic risk. And so the bank's monetary policy and its financial stability concerns are incoherent across themselves. And the final problem rests in a crucial element of the monetary system that we know today. The size of the money supplied grows when private banks make loans. Now that privilege creates a market failure in the market for new credit because banks are incentivised to lend to projects that have high private return and low private risk. And that skews lending away from free investment because free investment, as we've said, has high social returns and often actually has quite high private risk because of relatively young technologies and the like. So for all these reasons, the bank's stance at the moment seems somehow insufficient. But I said that it's actually aware of some of these problems. On the final point, the bank has actually published evidence about the fact of modern money creation but it seems yet to make a connection with the climate change issue. So if these problems remain, why does it take a view? Well, the answer you always get is actually political. It comes back from mandate. So the nature of central banking when it's subject to this result of political design. The instrument independence described how the bank is, for the most part, able to use its policy tools to achieve its objectives without political scrutiny or rather direction. But those goals, those objectives, are set by political leaders. So it requires legislation to actually change the primary objectives of the bank. But there is quite a lot of leeway for the Chancellor of the Exchequer to define parameters and actually set out how the bank interprets the goals when he or she writes a letter usually annually to the key decision-making committees within the bank. And the Bank of England act in 1998 established a agreement and gave the bank its first primary objective, which is price stability. That's the inflation target of 2% at the moment that you'll read about in the news. But the bank, as I've said, also has a financial stability objective. So it's concerned to monitor and safeguard the stability of the financial system. That objective is as recent in its current form, is as recent as 2012, following the crisis that was amended by the Financial Services Act. So a central bank can change over time. It's worth briefly also touching on climate policy in the UK, which has mostly been insulated from democratic politics and from the electoral cycle successfully by the Climate Change Act of 2008, which is established a committee on climate change, which is an independent advisable body which looks at the required investment to meet emissions reduction targets and also adaptation goals themselves mandated by the Climate Change Act. It's a legal requirement in the UK to reduce emissions to certain carbon budgets every five years. And the Committee on Climate Change advises the government not to do that. But that partly dispels the notion that managing climate change is somehow a partisan thing and unsuited to expert guidance. I'll come back to that point briefly in a minute. But first, what are we actually proposing? Well, there are several policies that the bank does not support the low carbon transition. And it helps to work in the bottom up with these policies, thinking about the tools that the bank can use and then in what context will we decide to use them? Because at the moment the bank's tools, as we talked about at the QE programme, are somehow unsuited to taking sustainability of the environment. And we discussed it in more detail in the report, but they include guidelines and financial regulation, which would shift bank lending and capital market investment to more sustainable investments. And monetary policy itself could be made more green in order to take account of the extra financial risk of low carbon assets. And instead, it would direct investment both private or public at the green investment gap. And I should say that decisions over where the money goes if this is public investment would still remain in the hands of democratically elected policy makers. What we want to do here is enable the bank to provide the funding in the first place, especially in times of recession that can then be used to fund your investments. This isn't about major spending decisions outside of democratic control. But it wouldn't be clear to the bank's decision makers when to use these tools unless it had a mandate to go with them. So what we've done here is we've mapped out the interior institutions of the bank. We went below them for too long in the interest of property. But the process we're proposing starts with government agreements. So based on the Department for Business Energy Industrial Strategy and the Treasury should really review the framework the monetary policy framework for the bank. The Treasury did this before in 2013 and it did it again. It did it then because of the context of the roots in financial crisis. We're proposing it do it to take account of the plan. The Department for the Basis concerned with carbon emissions and reductions in carbon emissions that's why we proposed it work in conjunction. Next, the Chancellor that actually made quite simple and feasible alterations to the traditional mandates of remits for the key decision making committees the Monetary Policy Committee and the Financial Policy Committee which I've put here in bold standing out from the traditional mandates. So you can see that we've got price stability but then we've proposed the Monetary Policy Committee taking account of the trade-offs inherent with climate sustainability when it's trying to achieve this price stability objective. And I'll ask if you've got some questions on this where we can go into the Q&A but I won't go too long. The point is that if these changes were made and the tools that we briefly discussed were added to the bank's toolkit then we'd see a bank of England that's able to achieve win-wins so it can secure macroeconomic and financial stability add a net benefit to the plan. If you put it this way suppose there's a financial crisis two or three years which by some account is extremely likely instead of a decade, another decade lost, wasted criticising monetary policy makers and the financial system for failing to learn lessons of the past we'd have reduced the risk to the financial system and to our society from company sitting on billions of high carbon fossil fuel assets and from the damage from weather like floods and we'd also see higher levels of investment in green sectors which have loads of potential for growth and for jobs. This is really about putting sustainability right at the heart at the core of our macroeconomic policy framework so I hope that after what you heard today you'll share that vision. Thank you. Thank you very much. Thank you for that, Rob. That's a great introduction to an excellent report. Thank you. I'm Fiona Harvey. I'm the Environment and I've been covering climate change and environmental issues and green finance since 2004 but it's an awful lot of green banking agencies in that time but this I think is something a bit different thinking it's central banking for a little part of the company. So we've got a great panel today who are going to respond first of all to the report we've just heard about and I'm going to take Barry Garner first of all he will be known to you almost the Shadow Secretary of State for International Trade dealing a lot with various issues that might be going on when he breaks it in these days as well as other things but he was also very deeply interested in climate change and was the climate change envoy under a program. Barry has to leave quite smartly so I'm going to let Barry make his response then I'll take Q&A over here then I'll hear the other responses when I'll have a look at Q&A afterwards. Thank you. Good morning ladies and gentlemen it's a tough gig isn't it you're speaking between Rob McQuarrie and Lord Dieman which means that you're speaking between somebody who knows everything there is to know about the subject that we're discussing namely Rob and somebody who knows everything that there is to know. So you know give me give me space and patience it's not often that I begin the day by quoting her Majesty but as we consider this morning's conversation about how we can hardwire sustainability into the Bank of England I am reminded of that story when Her Majesty visited the LSE and this was just after the global financial crisis of 2007-2008 and as she often does Her Majesty spoke on behalf of all of us when she famously asked the professors why did we not see it coming and her question still resonates actually with an angle held by many people in this country today how could we not have noticed that our markets were failing before our eyes and today a decade later the recession has left our country with a deep anxiety about the financial system and we model these platitudes saying we must never be caught unaware as again when an economic catastrophe is imminent and yet we face the economic catastrophe of climate change so the question that our children will be asking us is not the one that Her Majesty asked of the professors they'll ask us given that you saw it coming why on earth did you not take the necessary steps to avert it the economic crisis of climate change is markedly different to the recession we've seen it coming for some time now the gradual but extreme breakdown of our global climate is already without doubt one of the greatest systemic risks that our financial economy faces to its stability and that's not being announced and it's what business keep is it's what economists have been saying for many years Davos year after year the world economic forum publishes its reports unequivocly pointing to climate change as the biggest threat to our prosperity and it's now 12 years since the then lowly next turn now the lowly lord described climate change in history the greatest market failure the world has ever seen so with the new systemic threat to our financial system we must now begin to once again undergo the journey of redesigning the financial system to tackle it in much the same way that we did after 2000 a day so back then the recession was a radical over all of our financial systems between measures to ensure that in the future our economy would be resilient to the pressures that have brought it to its knees we raised capital requirements on banks to ensure that they could withstand dramatic losses we stress tested lenders so we can be confident that they can handle recessions and at the centre of major reforms like these was the total redesigning of the Bank of India parliament beefed up our central bank in 2012 so it could play a more strongly interventionist role in tackling risks to the economy with the creation of the financial policy committee the bank has an authority capable of taking a broad forward look across the economy to monitor risks and keep them in check across the whole financial system that's the deal so in the same way catastrophic climate change requires a similar wide range in response across our financial institutions we've got to transform every element of our financial system to ensure it can withstand the strains that the climate crisis is exerting but more than that we must also ensure it plays a full role in supporting the decarbonisation of our economy Lord Eden's committee on climate change estimates that the total investment needed to meet our fifth carbon budget is 22 billion pounds a year that's about 1% of GDP so we must also urgently mobile office our financial system to unlock those enormous financial flows to the green economy if we're to stand any chance of keeping to our commitments that we made in the Paris agreement so we're in the embryonic stages of this transformation the task force for climate-related financial disclosures has of course been leading the way to make the implications of long-term climate change transparent in the financial centre asset owner led activities like the TPI are showing investors how to understand and price in this company space in shifting total carbon economy and the city of London's green finance initiative has meant that by the end of March this year 38 green companies have collectively raised 10 billion pounds of green finance with the square mile now home to a burgeoning market for green bonds but to develop a resilient low carbon society we can't rely on climate sector reforms alone we've also fundamentally got to change the way our public institutions think and that's why for example Shadow Chancellor John MacDonald announced that a future Labour Government will extend the OBR's limit to ask them to improve the impact of climate change and environmental damage in its long-term economic forecast understanding what climate change means for our company is essential to the sound management of our public finances for now it's time for us to explore what climate change means for all of our public institutions at the heart of our financial system lies the Bank of England owned by our government to serve the citizens of London and its mandate is to protect and enhance the stability of the financial system of this country if climate change poses a systemic risk to our finances then it's surely the duty of the Bank of England to do something about it from climate change and to accelerate our efforts to tackle that change and this report being launched today is I think a tremendous starting point for that conversation on how the Bank of England ought to go about fulfilling that mandate of course this isn't to say that the Bank hasn't paid attention to climate change Mark Harree has been an absolute pioneer in this field and it's wonderful actually as somebody who speaks a lot on climate change now to be able to go out and say out of course the governor of the Bank of England backs this up by saying it's great that he's taken that lead and the TCFD's proposal to develop how in his chairmanship of the NSB and he's been instrumental in urging companies to disclose their climate risk in his motion. The Bank's public leadership on climate change is something I think that we should applaud but what this report shows is that there is still greater potential for our central bank to play a greater role in accelerating those efforts the Bank of England's policy runs counter to the risks it's supposed to be addressing with its monetary policy interventions and criteria for corporate bond purchase programs skewed towards higher carbon sectors and although the Bank of England has been a leading institution in its public endorsement of the TCFD TCFD's recommendations it's actually yet to lead by example and disclose its own climate versus the assets on its own. So for the Bank of England to play its fullest role in mitigating and adapting the climate change political will is needed. It actually argues that Bank is independent it's mandate and that of the financial policy community is fundamentally a political question and that's why it's so important that we're gathered here today in Parliament to ignite this conversation what we need is a central bank that better understands it's critical role in dealing with climate crisis. The Bank of England has a privileged position in the centre of our economic system it has the power to enact radical change in our economy much as it did in the art amount of the global recession. Back then in the face of the banking crisis public institutions bailed out the banking centre but now if I can steal your quote Rob it's time to bail out the cloud. We've got a few minutes for a quick Q&A with Barry so if you could put your hands up I'll put someone here anyone else in here I'll take you three Bruce Davies Bruce Davies Bruce Davies Bruce Davies Bruce Davies Bruce Davies So I guess the question there is really do we need an additional agreement if one of the statements that came through from the task force was that the world is effectively uninsurable at four degrees in other words we won't have an insurance industry so aren't we already facing an existential crisis for the financial system it's not that we can't bail it out it's actually it won't exist so does that actually sort of heighten the requirement of a political perspective something has to be probably long it's almost as if everyone's looking at the elephant and wondering what to do about it actually it needs to be done and it needs to be compared to quickly Thank you, I'll take the other two questions and then in that very answer Thank you very much on just this next work I mean arguably in order to reduce what we really need is an excellent financial crisis to impoverish as a response my point being that at the moment GDP the link between GDP and CO2 emission is very close indeed, Tim Jackson a profferitory doubt argues that you cannot separate I disagree but given that the government is talking about GDP in its actions every month what measures would you take to refine the green project they've talked about and alternative the national product the mention of whatever it is we measure every month according to what financial decision I think as far as I can see the greens are still pretty fuzzy I think we're going to take questions just for Mary and I will have a chance to do a broader Q&A later but he has to rush off so I think we may not be able to get to the full answer of that to later and the third question, yes Merlin King quite often talks about the prisoner's dilemma in other words the person of the country which acts first is going to suffer unless all the other countries decide to do the same could you comment on how the prisoner's dilemma does other things are actually going to change Thank you very much look, you pointed out that this is not just a theoretical issue about how we might best go about reforming our financial structure it's actually an existential threat I don't think that is in any way at variance with what this report is saying what the report is saying is that we have to make it clear to the Bank of England that it is given a specific mandate a remit to tackle these issues in every way and not to limit its activity to more conventional risk assessment sorry, that's a horrendous outphrase of what is a very long and very good report but what you've said is look, a four degree world and it's all up the spout what is contained in the report of course is something that is there out there in the public domain that Shell and BP are actually planning their planning scenarios are for a three to five degree world precisely the world in which you're saying it's all up the spout anyway and you add inputters to the need for this report to be taken seriously in changing what the Bank of England does and how it thinks about what it ought to do Dave now you talked about let's have another really good recession I think to paraphrase what you said because that'll reduce our emissions and won't that be a very good thing I think there's probably a number of people in society who wouldn't see it that way but also, and here I will defer to Lord Deepin who will probably be able to shoot down your argument much better than I and that is the argument that you put forward about how GDP is always linked to CO2 emissions growth because actually within the UK and goodness Lord Deepin is nodding to said and not shaking it in the UK we have managed over the past decade to do precisely that actually the past 20 years to do precisely that and that is really encouraging that you can increase GDP and reduce CO2 emissions and that decoupling of production emissions from growth in GDP is something that is absolutely essential because you don't persuade people to change their behaviour which is fundamentally what we're trying to do by saying, well we just want you all to go around wearing sandals and hair shirts that's not going to cut it for us and therefore that link has to be broken and the encouraging thing is we've managed to show where in which that can be done so I thought your name was Mervyn at the beginning but because you didn't give your name you talked about Mervyn King so I don't know your name but you talked about the prisoner's dilemma first mover well often people talk about first mover advantage as well but you know I think the extraordinarily good thing about where the world is in taking the initiative on climate is that it's not just us and and what happened within the Paris agreement was we moved from a world where previously if you remember back to Copenhagen in what 2008 was it 2009 that long ago in Copenhagen we thought we could fix the problem by wagging our finger by us the people who knew telling everybody else in the world you've got to do this and you've got to do that and you've got to do the next thing and that's why Copenhagen fell apart and was a disaster and what changed between Copenhagen and Paris quite remarkably was that people started saying no we've got to build this from the bottom up we've got to all be engaged in this and what we need to do is we need to see the country contributions of each country are which eventually became the INDCs and the intended nationally determined contributions we've got to see what it is that each country is prepared to do for the extent of the problem that it recognises and that's why Paris worked because it actually gave a structure, a framework within which everybody could say well I'll bring this to the party and we know that all of us doing that has meant we don't have enough at the party we haven't got enough voluntary contributions and that's why there is still this gap from where we are or where we promised to where we need to be but that's what the ratcheting mechanism has is supposed to address and that's why this year is so critical and it's why it is a disgrace that politicians are not going to the cock this year because they don't want to face up to their responsibilities to actually ratchet up their nationally determined contributions which for the most part they haven't even yet shown how they're going to fulfil. Thank you very much and on that note we'll have to say goodbye. No, no, I'm going to sit down there OK, well we're going to have Lord Dieben's response Lord Dieben of course is speaking to us as chairman of the climate change committee he's also, as we know he's a concept of peer and he's regularly cited in fact as one of the greatest if not the greatest environment ministers that the country has ever had but he's chair of the committee on climate change which of course was set up under the climate change act which is 10 years old this year and still an enormously important act as it barned governments beyond their term of office to think of carbon budgets and we've had reference to the climate change act in the report here of course and how it can be used in this context So Lord Dieben if you'd like to give us your response to the report please we're very anxious to hear it, thank you Well thank you very much and I'm very pleased that this event is happening I think it is a crucial one but it is important I think to start by saying that one of the problems that we have is that the issues of climate change have been thought of as if they apply only to certain bits of government for a long time it's been climate change energy climate change and a way in which we have to reduce our direct emissions So I want to start by saying that I think the best insight into climate change comes from the Pope's Aladato scene when he talks about climate change as a symptom of what we've done to the world I think it's a crucial way of thinking about climate change because once one sees it as a symptom then one recognises how fundamentally it ties in with all those other issues and it doesn't run counter I remember when they battled between the development agencies and the environment agencies because the one said the other didn't care about people and the other said they didn't care about nature today of course both understand that these issues are a threat both to people and to nature it has brought a whole range of people together who really weren't there before the difficulty is that if one comes to civil society outside the campaigners outside those who have a moral and religious interest in this we have compartmentalised our reactions to climate change and that we've done because it's convenient it's very good in a government to say we've got a we've got a minister who deals with this so I don't feel that I've got a responsibility as Secretary of State for Health or as Chancellor of the Czech Republic except when I'm asked directly for some money or something or other but it isn't actually central to me that's the reason why the climate change committee was perhaps surprisingly very supportive of the nature of the clean growth strategy because for the first time a government was prepared to say this is at the centre of our industrial strategy and not some byproduct something on the side now we shall see of course as we've made very clear whether this is real or not but it is certainly a move which is absolutely vital because we have to deal with climate change now what I like about this document is that it is reminding the Bank of England that it too has got to recognise that climate change is not one of those things that you can use as a compartment of the bank something which you can stand up and point to as affecting international stability but not affecting international day-to-day financial transactions which is where they are at the moment and I echo the comments not only of the speakers but very much Barry's point that we do have to honour the Governor of the Bank of England because he certainly has moved this whole argument a very long way on I wouldn't have thought four years ago that I could have stood up and said that the Bank of England's Governor is clearly on the same page as we are in the Climate Change Committee the least the most I could have said in those days was that he hasn't actually said anything about it now we are in a position in which he has recognised the fundamental disruptive nature of climate change this symptom of how much misused the planet that gives us life so how should we think about the future as far as the Bank of England is concerned the first thing is I don't think it can any longer compartmentalise climate change if it's true and it's Governor says it's true that climate change is perhaps the greatest disruptive force in international finance then you've got to do something about it you see the problem with climate change seems to me very simple it is if we didn't know why it was happening we wouldn't have any responsibility people didn't know why the black death happened so they didn't have any responsibility for one in three of the people dying we do know why climate change is happening and we therefore do have responsibility and it's there when I really come and deal with the prisoner's dilemma or indeed the argument that somehow or other we may destroy ourselves by dealing with climate change I have to start by saying we'll destroy ourselves by not dealing with climate change and there is no point in having all sorts of bits around it that's the first one second point is, as Barry said we have disconnected in Britain growth from emissions growth of 64% emissions of increase of early 40s, 42% that sort of mix over 10 years so we grow much faster than our emissions have grown and that's a huge advantage and it's something that we can if you like sell to other people we've grown that way because we have taken real measures and they're good for everyone I hate people, if I may say so I don't hate people but I hate people who sell that what we really need is a good crash because the people who suffer in good crashes are the poorest and the least able to defend themselves they are still suffering from the last good crash so we have to try also to recognise that it's a terribly terrible comment about humanity that we aren't clever enough to know why something is happening and what should do about it a comment about Her Majesty is absolutely true why didn't we see it coming we do see this coming and if we can't face up to it and find a logical real politically possible answer then we're saying something about humanity which is extremely unpleasant and therefore we have got to find a way through and all the signs are that the measures we are taking are not destroying the economy I'll give you one single fact we spend the average person 85% spends £9 a month more on their energy bills in order to pay for the green credit but they have an energy bill £90 a month because of the effect of those measures and the reduction in the energy use of the equipment, the boilers the toasters and everything else that they have so in fact the measures we've taken despite the daily mail in fact I've always thought it's a symbol of what is right if the daily mail takes the opposite view despite the daily mail the average family is in £11 a month better on because of what we're doing about climate change there is no reason why these should be contrary so that brings me to the three very short things I want to say about this report the first is of course the Bank of England has got to take much tougher measures to integrate its acknowledgement of the danger of climate change into all we've got there are several examples here some of which I do agree with totally some of which I would change in one way or another but it certainly is number one number two is we have to be a bit careful about demonising rather than encouraging so I don't agree with the concept that you should disinvest automatically from anybody involved in fossil fuels I want to make a distinction between those companies that recognise that they are where they are now but have to be somewhere quite different in 20 years time and they will take the measures to turn those great companies into something which will be suitable for a world that is fighting climate change now if you look at the fossil fuel companies there are many in which I would not invest because they are clearly still not understanding it Exxon Mobil still doesn't understand Peabody Coal still doesn't understand but those companies that are seeking to make a change we ought to be helping them to make that change because it's a very tough change to make you've built up a business when what you did was seen as to be morally extremely advantageous you land yourself with a business which now has got to find a new role and if you're willing to take the lead there I think you would have supported so I'm secondly in favour of the bank being much more determined to help those who are determined to change than they are at the moment and the last thing I want to say is this the bank has got to use its pressure upon government by the government it is independent to make the government understand that its decisions too have got to be in line with its commitments to the fourth and fifth garden budget I don't myself feel that the Department of Health has really understood what climate change means for the future health revolution I don't myself really feel that DCNS is making its decisions about the third of the nations meals for which it is responsible in a way which makes climate change central its discussions about digital what an awful word that is digital what I ask but its discussions about digital matters never seem to me to concentrate on climate change and the need to use the new technology to make it possible for us to disconnect growth from emissions the department of transport speaks with many voices but not with the single voice that we've actually got to meet carbon budgets statutorily and necessarily without fiddling business so the bank can make a huge difference by using its own direct powers and also by influencing the government by asking these questions of it when it comes as it does constantly face to face with treasury decisions decisions by ministers on spending I leave with just one word of faith in my business which advises people on whole questions of sustainability all over the world five years ago you would find it very difficult to find a single venture capitalist a single investor who unless they claim to be an investor with sustainability credentials who would believe that what we are talking about was a necessary part of investment decisions I have to say now I can't think of a major investment house that doesn't have this as a serious part of how it measures the management of companies that it intends to buy and how it then helps to train the management so that it can sell the companies at a profit they all know that these issues are real measures of people's understanding of risk and preparation of companies for the future if that is true then the Bank of England or more than anyone else to recognise that this is a key indicator of whether a business is doing the right thing not morally the right thing although it is but doing practically the right thing because no business will prosper if it doesn't recognise that climate change is happening that the world knows it's happening that the world is making not always the best but certainly intending to make the decisions which will meet the challenge of climate change and a business that ignores that will go to the wall so if you want to be co-down if you want to be Arthur Anderson if you want to be a business that was good once that is to ignore climate change thank you very much thank you there is a great deal to think about there we are going to move on to our final response on the report which is coming from very nice featherstone who is of course the Liberal Democrat spokesperson on energy and climate change and the Liberal Democrats obviously have a great history on this subject so please give us your response thank you and delighted to be here today you're right we have a great history and we have two great secretaries of state doing the coalition government both from the Liberal Democrats then making me the job when I found the secretary of state but very very delighted to welcome to this report and I congratulate positive money and a piece of work in an area where it is vital to make progress and make it urgently when I came in to post was energy and climate change spoke to person to the Liberal Democrats and looked at what Chris Hume and David had done we were a much reduced force so I was trying to think how can I use my position for maximum influence and I set out to position us the Liberal Democrats go further and faster on the other party and commissioned our policy we've always been zero carbon in 2050 we've never done the work to substantiate that and I quite like being evidence based so this report is set out today it's published in the autumn it's called vision for Britain clean, green and carbon free and I'm delighted to see that Clare Perry has now asked more people in the climate change committee to look at that I like to be at what my report looked at it the thing that struck me most was given the signing of the Paris Agreement and given the sustainable development roles there was no visible, tangible feeling of a step change in anything that anyone was actually doing and we had together with that the urgency of climate change the mass opportunity of a world where low carbon products low carbon services meant that the green economy is developing at three times the rate of the normal economy and we were also massively under addressing the risks of climate change and then obviously like everyone has said that came across Mark Carney's work and that absolutely crystallised for me where we needed to go next and the second part of the lived and climate change work is exactly around green finance and sustainability we put on an event at the stock exchange which we've been scape old quite recently called making London the sustainable investment capital of the world and I had a recent debate in the lords making the UK the sustainable capital of the world because I think that is both our opportunity and our necessity now Mark Carney's work has made the world really seen how to take notice in climate change and financial markets his ideas leadership has really been a game changer focusing on the climate change agenda post Paris the bank is a key member of the central banks and supervisors network for greening the financial system which is a great initiative it's a European initiative but it's unclear where it's going to actually make an impact and in February 2018 the bank made a written submission to the UK Parliament Environmental Audit Committee and the bank itself referred to quote the bank's effort to ensure ensure the transition to a low carbon economy is financed efficiently and prudently so whilst this affirmation of the bank's role is important in itself it actually has to do that in my view and I thought this report was incredibly helpful and important in ways it might make good on its promise but it also opened up two fundamental issues whether the bank is taking its fundamental role sufficiently seriously it's good to see that the bank along with other UK authorities is supporting both green finance initiatives but also there is a real contradiction in their actions in terms of climate change and the degree I mean I heard what Lord Dieben says and I always listen and agree with Lord Dieben in my interest to do so but the degree to which fossil fuels still seems to remain the dominant source of energy that is in investment this is picked up in the report it doesn't make any sense that the bank is recommending the task force on climate related financial disclosure and the disclosure by companies climate risk and TCFD includes those who are relating directly to fossil fuels doesn't make any sense that it's recommending that it be voluntary being voluntary sends the wrong message to investors voluntary will mean that those that are will follow that route but as the report calls them the laggards won't be reform in our view it needs to be mandatory and the bank also needs to encourage discussion towards waiting bank finance of fossil fuel activities and the use of a green supporting factor and or a brown penalising factor I think yes encouraged by all means those companies who are sharing a bit of ankle on this but they're not showing enough ankle and they need some force and regulators can create a pricing differential between brown and green by increasing the cost of revenue through capital of financed brown and doing so on a risk based argument that the risks associated with brown have systemically been underestimated that there are going to be companies don't mean a number of stranded assets all over the place and that poses a great risk the overarching point that the report makes is well made and the balance of financial stability looks incoherent over time unless it considers the long term reliability of the economy and I would suggest to the back of England the financial policy committee and the monetary policy committee that they read this report and take the advice in it seriously to move forward on those actions we actually had the opportunity to make the UK the green finance capital of the world to help tackle change, underpin the decarbonisation of the UK economy itself necessary to future growth and to bolster the position of the city of London particularly after the B word, Brexit UK needs a sustainable financial strategy and just to lay this out very quickly promote green finance through innovation and financial policy including better flows of information to enhance climate risk disclosure both for companies and for flows of finance action to support green bonds and fiscal incentives for green investments I'm afraid we're in a very, very fast-race competition with a number of other countries in the world to move in this direction and our government should be issuing a green sovereign bond as an indicator of its backup but as Lord Eden said we're not sure how much backup is actually there having read the clean growth expanding the level of green finance through increased levels in infrastructure investment underpinned by an ambitious and stable policy framework the establishment of a British housing and infrastructure investment bank replacing the green investment bank which should never have been sold off and through mainstreaming green policy aims into institutions and sources of capital and developing a broader range of activities including green mortgages exploring the role of the insurance sector including for example offering energy efficiency insurance and public alternative finance I have to say I think energy efficiency should be an infrastructure priority I think it has been wordful in this country and I think the removal of things like the zero carbon home standard is an absurdity Anyway, I hope that the Bank of England and other central banks and financial institutions read your report positive money well done for driving this agenda forward for anything Thank you very much for that Right, well now we've got an opportunity for more questions to our panellists and we do have some microphones around we've got a little bit more time so probably we can use them There's a gentleman here at the back Could I ask you when you're called on to ask a question or make a comment if you could be concise and brief as we'd like to get as much in as possible and if you could also when you stand up if you could tell us just your name and if you have a particular affiliation to a group or organisation or company do let us know if you have one You don't have to have one At the back, please Would you mind standing up if you use it first Thank you My name is Sarah I'm a self-employed in doing research in the environmental problem areas of all sorts of solutions I've just written down a few quick points just to make it quicker In terms of carbon containment a lot of people are talking about that but the one thing that seems to be missed at least across the UK and this is something that is evidently sourced or started in Sheffield is the trees across all of the UK mainly and at least anyway thousands of them are being chopped down and that's been written about in articles and newspapers because the mobile phone companies need a better reception Now in addition to that people are talking about the clean green energy but the clean green energy requires the banks to fund the mining companies the mining companies need to mine the minerals that are required from other countries and my question is that how much of this is a circle that we are creating ourselves are we heeding when the scientists worldwide in proven journals are actually saying that the increasing amount of radiation from my phone and also the monitor that the police were above their heart as well is actually causing cancer so what are we really actually solving when the people who are actually using the surface are actually just dropping our flies I think this is something that really needs to be addressed and I've found that the people in parliament when I've spoken to them in the last few months they actually don't know the dangers of wi-fi themselves thank you thank you very much have we got a question at the front there from the Guardian actually here I'm really very much I was going to say that about the Guardian I was interested that the politicians have avoided perhaps much practical approach to a report which is about the work of monetary finance this is a policy that will change fundamentally what the bank does and it doesn't usually end the issuance of public debt risk-free instruments for the financial sector to disappear it provides inflation risk that needs to be tackled in a different way but it also suggests that politicians rather than financial indicators of use that's a really big change that suggests that most people are more important to them but I didn't hear an answer to that thank you very much I'm sorry I've got a question here thank you Hello, my name is Rema I'm with Finance Dialogue and my question wasn't something that was best mentioned which was the green support team around penalising factor and I was interested to hear from the panel what you guys are in each individual can you repeat that? I'm sorry there's a debate about whether in capital requirements for banks there should be a green supporting factor or a brown penalising factor or I was interested to hear on each individual panel things thank you very much thank you very much thank you on the whole question and I'll put back if we could have the microphone going now thank you I just wanted to know if you've had a chance to talk to Bank of England and if so if they've had any reactions to the feasibility of this would anyone else on the panel have these sort of discussions and what the practical implications of this might be for them? thank you thank you a very concise question there I'll take out one more just one more I think you've had your hand up I'm a little bit stressed looking at the reference sorry it's easier to hear if you wouldn't mind standing it looking at the reference to the ambitions of the green growth strategy but it's been accompanied by big cuts and subsidies for clean energy and quite the falls and the amounts of money you are in to those technologies and what do you think the gaps are there why should it be built? lovely thank you very much indeed for that question thank you so we've got that question on the the green growth and the cuts questions on penalising and support on monetary financing and the question over here about the the vicious circle sometimes I'm going to give you your chance first Rob as the author of the report are we going to do you don't need to answer every question I just want one and the others respond to the same question or shall I speak on all of this I'll do whatever I want do what you want whatever you feel absolutely you're right ok well I can get back to these ones about the specific policies first of all let's go with the green support just to clarify for everybody this is the notion that because banks have to hold a certain amount of capital when they make it alone this is a capital requirement this is a part of financial regulation so there's been a proposal that because high carbon assets are riskier they should have to hold more capital because there's a higher chance that because all the risks that we've been talking about the loan will go back and they'll need to have the capital there so compared to low carbon and the green supporting factor is the idea of making the capital requirements for green projects lower the brown payment factor is the idea of making the capital requirements for really high carbon projects higher and keeping everything else the same this is kind of a relevant discussion because at the EU level the green supporting factor has been discussed quite favourably but in the report we discussed that there are some big problems with the green supporting factor because really we've spent the past 10 years trying to shore up financial system against extra risk and trying to protect banks from seeing the same kind of thing happen again and to then strip away capital requirements really feels like a quite misguided policy especially because lots of the this is a very novel topic and lots of the types of risk that we're talking about are still quite poorly understood so it doesn't make much sense to go allowing banks to make much more favourable loans or favourable to them to perhaps green mortgages which is not clear or actually any systemically less risky than the normal mortgages but the brown payment factor on the other hand it doesn't have those downside risks to the policy so we come out in favour of that sorry we come out in favour of that in the report on the talking how we talked to the Bank of England yes we started this entire process really with talking to the the Union inside Bank of England that deals with the climate stuff that published this quarterly bulletin article that was briefly on the screen and the impression they were very very helpful but they are working within the Prudential Regulation Authority and they're concerned with supervising the entire financial system trying to understand some of these very complicated things and how do we measure the risk of carbon assets and so I suppose understandably were a bit they weren't too pleased to be told that they should be doing more but I wouldn't just go so far and say all of that wrong the reasoning behind this entire report was that we were trying to look at why it is that the central bank community at large reacts to this in this way and says we shouldn't be doing more and I agree I would really echo the praise for the Bank of England and for Governor Mark Carney and all the officials that have given speeches on this it's great that everybody is suddenly talking about this but there's definitely a cognitive lock when you start talking about raising investment they are very on page with the risk and that's why the the clientage unit is almost siloed inside of the bank but there is no way that those messages on that risk are getting across to the monetary policy side of what the bank does and in fact in Governor Carney's speeches he says I don't think it's appropriate that we should really compromise the bank's normal way or its monetary policy or its financial relation we shouldn't make those things we shouldn't change those things of our climate lines which is completely against the spirit of what I think I've been saying and I truly believe is that we should put sustainability at the centre of the entire benefit and finally I'll talk about the monetary financing thank you for that question because it's obviously the boldest thing that we put in the report and it's something that of course the money we argue for and we are strongly in favour of and there are definite synergies between the need for green investment and a reimagined role of monetary policy where it's not just it's not just interest rates and it's certainly not just bond purchases that's the traditional quantitative easing type the problem with monetary finance is that it does require a level of coordination between fiscal policy makers, the Treasury and monetary policy makers that hitherto is just unknown and in fact since the financial crisis we've seen quite the opposite where the banks' monetary policy is favourable to fiscal policy makers to be able to do some spending but because of the delusion of austerity we haven't seen the accompanying increase in fiscal spending so there's a lot more institutional frameworks to be worked out how monetary finance would interact with the Treasury, how dynamic would work and that echoes in lots of the other work that we do with money and so the recommendation we make in the report is that the bank should start thinking about how new monetary policy tools which it sorely needs would interact with these other objectives especially climate objectives as a first step but thanks for raising it Thank you very much, thank you for the replies I was just going to just briefly comment on the precipitate removal of the renewable subsidies I think that set the shock way through investors and confidence and I think it was a great mistake of the government to have done it in that way because so many businesses in the solar industry and others had got their business plans together based on a set of goalposts that were then moved entirely and undermined and I think the solar industry lost a huge amount of jobs and has caused a great deal of investor weariness at a time when there is a lot of money looking for a home, swimming around well looking for investment but there is a great nervousness about actually putting that money into the projects because the government is very out here even in the King Bro strategy where it is talking a good talk, it doesn't have the sort of rigor of a delivery plan on any of it and I think that makes people very nervous Thank you very much, Lord Dieben I don't want to miss the word about trees in the first place first of all with the number of examples where people are cutting down trees that are busy fighting, in fact we are growing a lot more trees, we have a lot more trees to grow and one of the things that the climate change committee has clearly pointed out is that if we are going to have any move from 2 degrees towards 1.5 we really got to take carbon out of the atmosphere and that does mean a whole range of changes and we are just about to embark at the joint agreement with Michael Gove on a very serious piece of work on land usage and the whole concept of how we have to think about land in the future which I think is a very very fundamental thing I have to say I don't actually agree with the comments that were being fried by this stuff I think that's a myth and that's not what one has to do with you, what you have to do is my mother would say the best you can at the time, what I mean by that is this is an incremental matter we have to make the increments much quicker than we've done before but don't let's think you can get to Nirvana immediately you've actually got to do these things as rapidly as you can but recognise that dislocation is a very serious matter for those who can least protect themselves from that dislocation and therefore you really do have to try to do this in a sensible way our problem is that that very often means that people don't move fast enough so our pressure must always be to move faster but just occasionally in an audience like this let's remember that these changes do have very significant social results which we are very bad at protecting people against and it's one of our failings as a society now I am here as chairman of the climate change committee not as a politician and certainly not as a defender of the government that's not my job my job much of the time is to bring the government to book and as far as the clean growth strategy I've specifically said that it's positioning and it's vision is something that we certainly need and should support we've then specifically said that its details are practically entirely lacking so at the end of June as we have by law we will be assessing how much the government has so far done towards that towards the first stages of its clean growth strategy and at the moment I think that may be somewhat critical but I haven't read our latest version of that and it will take us a bit time but I don't think anyone will suggest that we're going to be other than very very tough on this and one of our problems is that the road to zero which is a major part of this whole programme has not yet been published we are not yet when it will be published I think it's been held up I just think it's not been published and of course unless you get some real dealing with the whole issue of transport and land use of the two big issues that we're going to have to face pretty quickly and we're looking very toughly on that. Now on monetary financing I'm not sure perhaps I use language which was not satisfactorily neat so I will try to say it in a different way I do think that moving the way we do these things so that climate change becomes an essential part of the decision making that we're doing is essential and I think it's right for this report to have put it like that but I also note that the author is very clear about this this is much more complex than almost anything else that Joyce said but it's not in the most radical comment but one of the things about it is it's the most complex comment and we don't have any possible institutional arrangements to make this a reality so I don't think it's unreasonable as chairman of the climate change committee to say this is clearly the direction in which we ought to be moving I'm not technically capable to say whether I think that what sort of new institutions and mechanisms we need to have it's an area which we're about to start some work on not just this actually but the financial implications of the fourth and fifth carbon budget and this will certainly come up in that but I don't think anybody should believe that you wave a wand and it happens because getting the treasury in the bank to come to a conclusion together about even the smallest debt has not proved terribly easy in the past so I don't want I don't want that to be our main effort because if he is the main effort he's going to take us a very long time and climate change will have overwhelmed us it seems to me that we've got that deal done I wanted just to say just one other thing I hope that we recognise that the reason we're talking about finance and the Bank of England is because it is extremely important and because it is what is going to drive things but it is not because it is the only thing and one of our difficulties is that we really do have to be much more holistic about the approach that we have to climate change so it should be a question we all ask in every action we make whatever that action is because it touches every action and I of course it's right to come to the financial structures and say you've got to get yourself in line with all this as long as we do realise that we're doing that because they've been a bit behind perhaps more than a bit behind that's why we're doing it but it's not because they're the only bit the trouble with our society is that we need a holistic change in the way in which we think about these things that's why my first quote was from how Dato see because what is so unique about it is that in a very short compass it actually reminds us that it's about the decisions we make as to how we go to work the decisions that we make about the poor the decisions that we make about how we grow our food the decisions that we make how we treat our animal all those things are part of a holistic change in the way in which we look at ourselves and the world and I do think we live at the most exciting moment of the last 500 years because this is the real seminal change in the way human beings think about other human beings it's the end of imperialism and we have been imperialists since the first village bashed up its neighbour for the grazing rights and we've got to learn to live with other people which is why Brexit is such a disgraceful scandal and why it should be opposed by all of us because it's saying we can do things on our own and bugger you that is exactly how the world has worked for far too long and we need to recover know perhaps discover a way of living together in a very very different way getting the finance system to help that is a huge importance but it's only one thing in a much bigger issue well on that optimistic and rising thank you very much Lord Dieven right well thank you for your questions and your comments I hope you enjoyed the discussion thank you to our wonderful panellists they're a bit depleted now because two have had to go but especially to Lord Dieven to go for the report itself thanks to Positive Money for holding the event and thanks to Catherine West who was introducing us earlier there are refreshments at the back here and an opportunity for you to discuss what you've just heard and I think there are copies of the report as well so it just remains for me to say thank you to you all and let's thank our panellists