Taxpayer-funded bailouts for big business must come with environmental conditions in future, a committee of MPs has said, six months after a VICE World News investigation showed that billions of pounds of public money was going to big polluters with no strings attached.
In a letter to the Bank of England, chair of the cross-party Environmental Audit Committee (EAC), Phillip Dunne MP, said, “In future, the Bank should require large companies receiving millions of pounds of taxpayer support via the COVID Corporate Financing Facility (CCFF) to publish climate-related financial disclosures in line with the Government's Green Finance Strategy.”
The COVID Corporate Financing Facility (CCFF) was introduced last March by the Treasury, and administered by the Bank of England as part of a raft of support measures offered to companies in the wake of the coronavirus pandemic.
A VICE World News investigation in August found that almost £19 billion of public money had been accessed through the CCFF by companies who’d engaged in environmental destruction, as well as fraud, corruption and the manufacture of chemical weaponry, as well as defence firms that have sold weapons to regimes accused of human rights abuses.
Only the UK’s largest companies are able to access funds through the CCFF, which offered year-long loans at interest rates of between 0.2 and 0.6 percent. Smaller companies, unable to access funds through the CCFF were forced to take out loads through commercial banks at a rate of up to 6 percent.
Finance through the CCFF was available to these companies after the Bank of England delayed a promised review into its practices, due to bring them into line with environmental targets set out in the Paris Agreement. Speaking in July last year Governor of the Bank of England Andrew Bailey defended delaying the review saying, “In such a grave emergency affecting this country, we have focused on the immediate priority of supporting jobs and livelihoods of the people of this country”.
Five months on, according to figures published on the 20th of January, 50 companies have outstanding loans through the CCFF, totalling £12.33 billion. No environmental conditions have yet been applied to any finance accessed through the CCFF.
VICE World News analysis has found that, of the 50 companies, ten of them, or 20 percent of those with outstanding loans through the scheme, come from fossil fuel or polluting industries. The ten, who have accessed £3.265 billion in public funds between them, include four airlines. Another is Gatwick airport, which applied for access to the fund in August. No environmental stipulations have been attached to the £250 million the airport has drawn from the fund, including £75 million drawn in the last week.
There is also Israel Chemicals Limited, which is the sole provider of white phosphorus to the US army, which in turn provides the weapon for use by the Israeli army against Palestinian cities. The company was also responsible for various environmental disasters in Israel.
Dunne’s letter came following the EAC’s “greening the post-COVID recovery” inquiry. It also urged the bank to align its Corporate Bond Purchase Scheme (CBPS), which reached £20 billion in 2020, with the Paris Agreement goals.
The Bank of England responded to the letter with a statement on Twitter saying, “Climate change is a strategic priority for the Bank. We have an ambitious programme on climate change. From stress testing of the largest UK banks and insurers against climate-related financial risks through to working internationally with the central bank network for greening the financial system – a network of which we were a founding member.
“As the Governor told the Treasury Select Committee in November, work to consider how best to take account of climate considerations in our corporate bond portfolio is already underway at the Bank.
“The CCFF scheme closed to new applicants on 31 December and will close to new borrowing in March – with all borrowings due for repayment in March 2022.”
Fran Boait, executive director of fair banking campaign group Positive Money said, “As the public institution overseeing and underpinning our financial system, the actions of our central bank have a key role to play in ensuring a green COVID recovery. It’s more important than ever that the Bank of England gets its house in order, especially with all eyes on the UK ahead of the COP26 climate summit.
“Without bold action from the Treasury and the Bank of England the UK risks falling behind other countries, and the entire world risks falling further away from a safer future.”