What is the Bank of England's new policy regarding thermal coal-linked bonds, and when does it take effect?

The Bank of England has announced it will no longer accept bonds linked to thermal coal as collateral for its key loan arrangements with commercial banks, a policy that takes effect in October. This decision reflects the Bank’s assessment that such bonds are now too financially risky due to the global shift away from fossil fuels toward net-zero goals, and it applies specifically to bonds tied to thermal coal — the type burned in power plants — which the Bank identifies as exposed to significant climate-related financial risks.

Why did the Bank of England make this change, and how does it differ from other central banks' approaches?

The Bank of England made this change because thermal coal companies 'can be exposed to potential financial risks connected to the adjustment of the economy towards net zero', and it aims to protect its balance sheet by excluding such high-risk assets and applying discounts (haircuts) to bonds in other climate-sensitive sectors. The policy is described as 'far more strict than those currently adopted by most of its western counterparts, including the European Central Bank', though the Bank issued the announcement quietly in early June without fanfare, contrasting with more vocal climate initiatives elsewhere.

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Bank of England to stop accepting bonds linked to coal for key loans

Jul 19, 2026

Starting in October, the Bank of England will ban thermal coal-linked bonds from use as collateral for key loans due to climate-related financial risks. Activists hail the move as significant, noting it exceeds standards set by Western central banks.

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