Greening our Corporate Bond Purchase Scheme (CBPS)

In 2021, we started to 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.

The CBPS

The Corporate Bond Purchase Scheme was launched in August 2016 and expanded in 2020. It purchased investment-grade sterling corporate bonds issued by companies judged to make a material contribution to the UK’s economic activity. The scheme was a monetary policy tool, and so its size was determined by the Monetary Policy Committee as part of its monetary policy decision-making in order to achieve its inflation target. For as long as the MPC maintained its target for CBPS holdings, the Bank undertook periodic reinvestment operations to replenish the scheme as bonds mature.  

In February 2022, the MPC agreed, in light of economic conditions, to begin to reduce the size of the CBPS by stopping reinvesting maturing assets and by a programme of corporate bond sales. The CBPS was fully unwound by April 2024.   

Context for greening the CBPS 

The UK has committed to a target of net zero greenhouse gas emissions by 2050. Government policy and companies’ actions in response will be the primary driver of this climate transition. But lenders and financial market investors can play a supporting role by allocating finance to further sharpen firms’ incentives to reduce emissions. 

In March 2021, the Chancellor updated the MPC's remit to confirm that the economic strategy of the Government – which the MPC is expected to support as a ‘secondary objective’ – included supporting the transition to net zero. Based on this, we considered how to adjust the composition of CBPS investments to support the transition to net zero, without undermining the scheme’s primary monetary policy purpose. Doing so was also consistent with evidence that market prices underestimate the risks and opportunities associated with climate change. 

In May 2021, we published a discussion paper exploring options for greening the CBPS. The feedback we received helped us to shape our final framework, which was implemented from November 2021, and which we summarise below. 

Our approach

In its May 2021 discussion paper, the Bank set out the following principles for greening the CBPS:

1. Incentivise companies 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, learning 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.

After receiving feedback to the discussion paper, we confirmed these principles and, starting in November 2021, put them into action using four tools, calibrated to complement each other. 

Our tools

Targets
  • ultimate target: achieve net zero emissions associated with the CBPS portfolio by 2050 
  • intermediate target guiding near-term investment decisions: 25% reduction in the weighted average carbon intensity of the CBPS portfolio by 2025; this interim target was aligned with a science-based transition pathway to net zero produced by the Network for Greening the Financial System (NGFS)

Eligibility
  • firms ineligible for further purchases unless they meet climate governance requirements: public climate disclosure in line with the Government’s requirements, from 2022; and for higher-emitting sectors (energy and utilities) public emissions reduction targets 
  • issuers with any thermal coal mining activities were ineligible – those using thermal coal in their activities were also ineligible unless they met stringent criteria related to: eliminating existing activity in line with science-based pathways, reducing emissions over time and renewable energy provision 
  • we were mindful, in our eligibility criteria, that the transition to net zero would not be well served by climate-conscious investors indiscriminately stopping investing in firms that are high emitters; this would lose us influence over sectors of the economy that are crucial to overall transition to other investors, who might care less about climate considerations

Tilting
  • tilt purchases towards stronger climate performers within CBPS sectors, and away from weaker performers, using a scorecard incorporating:
    • level of emissions intensity in latest data;
    • past reductions in absolute emissions (relative to sector-specific pathways for high emitters);
    • publication of a climate disclosure; and
    • publication and third-party verification of an emissions reduction target.

The ‘buckets’ firms were allocated to for each of these four metrics were weighted together to allocate firms to an overall climate category. This affected the price the CBPS was prepared to pay for a firm’s bonds. 

Escalation
  • review calibration of CBPS greening annually, increasing requirements as coverage and robustness of data/metrics improve;  
  • escalate intensity of actions, including, where appropriate, loss of eligibility and divestment where climate performance is inadequate.  

We also committed to being as transparent as possible without affecting the Bank’s objectives. This included, among other things, reporting on the climate characteristics of the CBPS as part of the Bank of England's climate-related financial disclosure. 

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This page was last updated 28 May 2026