source : bloomberg. having set an overall target, our second and third tools – tilting and eligibility – will play the key role in influencing incentives for transition. we propose to tilt future cbps purchases towards issuers which are performing relatively strongly in support of net zero, and away from those that are not. tilting is a well - developed investment practice, applied to climate - based central bank purchases by dirk schoenmaker, 22 and has a number of key attractions : - it will allow us to maintain a dynamic engagement with issuers – dialling up those whose strong record improves, and dialling down the laggards ( a process illustrated schematically in chart 9 ) ; - similarly, it will allow us to improve the mix of climate metrics we use over time, as data coverage and quality improves ; - predictable, progressive action of this kind will send a clear message to issuers, and the wider market, about the bank ’ s current and future intent, giving time and incentive to adjust transition planning ; and - it will help avoid concentrations in the portfolio, and maintain space to use the cbps for future monetary policy purposes, in either direction. greening - monetary - policy. pdf ( bruegel. org ) all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice chart 9 : stylised illustration of a climate - based tilt to calculate the appropriate tilts, we will explore the use of a ‘ scorecard ’ approach, capturing a range of metrics related to company climate performance. judging which metrics to include is a key task for the next stage of the work, and we look forward to receiving input and guidance on this question. potential candidates include : the level and rate of change of companies ’ carbon footprints, the existence of regular climate reporting, commitment to specific reduction targets, and authoritative third - party validation of those targets. collating comprehensive metrics of this kind will not be straightforward, given the very uneven state of current company level reporting ( table 4 ). and any model - based substitutes would need to meet high standards of robustness and transparency. it is therefore possible that the initial approach may be relatively parsimonious, or vary by sector. table 4 : climate data coverage for cbps - eligible firms all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice tilting

going to be those with a weaker commitment to net zero ; second, simply selling anything with a high carbon footprint penalises those with strong and credible emissions reductions plans just as much as it does those with no such plans. the net effect therefore is likely to be to reduce, not increase, economy - wide incentives to reach net zero. 16 and our end state portfolio, consisting exclusively of firms with low and stable emissions, would by definition play little material role in driving future emissions reduction. i draw two conclusions from this. first, engagement beats disengagement. and, second, when ranking firms ’ contributions to the achievement of net zero, look forward as well as back – giving weight to the calibre of their emissions - reduction plans, and their performance over time against those plans. divestment is a powerful tool, and should remain squarely in the toolkit. but it should be used as a credible threat to reinforce incentives, not an indiscriminate ‘ quick fix ’. a strategy of engagement works best when the message is big, unavoidable and credible. here we face a slightly different challenge. the bank of england ’ s voice has influence. but the cbps is not a huge facility. £20bn may sound like a lot. but it ’ s small in the world of global capital markets – accounting for just 6. 5 % of the sterling corporate bond market, 0. 5 % of total sterling traded assets and a vanishingly small share of global holdings ( table 1 ). table 1 : the cbps in context a worked example is given in section 3 of the discussion paper. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice what ’ s more, we are not currently making active purchases, because the mpc ’ s target stock for the cbps was reached last year. that means the only scheduled purchases are reinvestments, averaging around a billion pounds a year in the near term. so it ’ s clear we can ’ t rely on buying power alone. table 2 : selected investor frameworks17 but we can still use our position to take a lead, working closely with other like - minded central banks and investors. that movement is strong and growing. earlier this year, the network for greening the financial system ( ngfs ), a group of 90 central banks and supervisors which the bank helped to found, published a https