Putting a Price on Disclosure: How the Bank of England’s Climate Tilt Moved Markets

What actually happened and what the research finds

Introduced in 2016, the BoE’s Corporate Bond Purchase Scheme (CBPS) bought investment-grade sterling corporate bonds issued by companies that make a material contribution to UK economic activity.

Between late 2021 and early 2022, the BoE adjusted the scheme to favor companies with stronger climate performance. Firms were assessed across four criteria: TCFD-aligned disclosures, emissions reduction targets, emissions intensity, and recent changes in absolute emissions.

Crucially, the BoE did not change which bonds it could buy. Instead, it adjusted the maximum price it was willing to pay. When buying bonds through its regular auction process, it offered higher prices for bonds issued by firms with stronger climate performance – increasing their likelihood of being purchased.

The research finds that this “climate tilt” led to a small but statistically significant compression in spreads – a measure of how cheaply firms can borrow relative to government debt – of around 0.3 to 1.7 basis points for bonds issued by firms with stronger climate credentials. Consistent with the programs’ relatively modest scale, the movement is small in absolute terms but robust.

However, the most striking result is not the size of the effect — it is what drove it.

The bonds that saw the most consistent repricing were those issued by firms that had:

• made climate-related disclosures, and

• set emissions reduction targets

By contrast, there is little evidence that bonds issued by firms with lower emissions intensity or stronger historical emissions performance experienced similar improvements in their borrowing conditions. In other words, markets responded to forward-looking, verifiable signals — structured disclosure and credible transition commitments — rather than backward-looking emissions data.

This distinction is important. It suggests that investors are not simply pricing based on how firms are performing now, but how credibly they are positioned for the transition ahead.

There is another important insight. Because the BoE did not publish firm-level scores or pricing rules, investors could not fully anticipate the impact of the tilt in advance. Therefore, the policy announcement itself did not affect prices. These were adjusted only on the days when the BoE was actively purchasing bonds. In other words, intention wasn’t enough. It took intervention to move the market.

More broadly, the scheme provides a concrete example of how central bank operations can influence how climate-related information is reflected in asset prices – and actively shape how the market prices climate transition.

Why disclosure matters beyond compliance

Perhaps the most important implication of the research is what it says about the market value of climate disclosure.

Firms that had made TCFD-aligned disclosures and set emissions targets saw modest but measurable improvements in their secondary market financing conditions, as reflected in lower bond spreads during BoE purchase operations.

This was not primarily about measured emissions performance. It was about the credibility of forward-looking climate commitments — which structured disclosure frameworks are designed to capture.

Disclosure, in this sense, is not just about transparency. It is about credibility.

Frameworks and standards like TCFD and IFRS S2, as well as voluntary disclosures such as those made through CDP, help firms communicate how they understand, manage, and plan for climate risk. The evidence suggests that markets, in responding to central bank policy, place more weight on these forward-looking signals when pricing bonds.

The scale of the BoE’s program was limited, which naturally constrained the size of its effect. But the mechanism is clear. If future asset purchase programs are larger or more persistent, the impact on financing conditions for firms with strong disclosures and targets could be more meaningful.

What this means for central banks

For central banks, the findings are both encouraging and instructive.

First, they provide evidence that climate-tilted asset purchases can influence markets through familiar monetary policy channels. The results are consistent with a standard portfolio-balance mechanism: by increasing demand for bonds issued by stronger performers, the BoE effectively lowered the cost of borrowing for those firms.

Second, the results highlight how much design choices matter.

Because the BoE did not publish firm-level climate scores or the precise mapping from climate performance to purchase pricing, investors had to infer how the tilt would operate. In doing so, they relied on the most observable and credible signals available — disclosures and targets. This helps explain why those metrics, rather than emissions data, drove the results.

These findings are consistent with a gradual shift in some central banks’ thinking. Traditionally, asset purchases have been designed to ease financial conditions and support the market, rather than to influence pricing. However, the BoE’s climate tilt represents an early and relatively modest example of how these tools can be used to steer capital in markets where climate risk may be mispriced. The results demonstrate that even small, targeted interventions can affect relative pricing across firms.

Future programs could be more effective if central banks were more transparent about the scoring methodologies used to assess firms’ climate credentials, and if they aligned more closely with widely used disclosure frameworks.

For the BoE itself, the evidence strengthens the case for revisiting a climate tilt in future purchase programs — particularly with greater transparency.

The UK policy moment: disclosure, standards, and transition plans

The UK is currently consulting on Sustainability Reporting Standards (UK SRS) and mandatory transition plan requirements. These debates are often framed in terms of compliance costs and reporting burdens.

This research adds a different perspective: disclosure quality can shape financing conditions.

The findings suggest that:

• Markets respond to structured, forward-looking disclosures

• Credible transition plans are meaningful signals

• Disclosure frameworks can influence capital allocation, not just transparency

Three implications follow:

• Broad coverage matters: financing effects only materialize if a large share of issuers are captured

• Quality matters: markets reward credible, structured disclosures rather than backward-looking emissions data alone

• Institutional alignment matters: standards should reflect information that investors and policymakers use in practice

If UK SRS captures the kinds of forward-looking signals markets demonstrably respond to, disclosure becomes more than a regulatory requirement — it becomes a pathway to financing advantage.

What companies should take from this

For companies that issue — or plan to issue — corporate bonds, the message is practical.

Climate disclosure is already beginning to shape how bonds are priced in secondary markets, even if the effects are currently modest. That influence is likely to grow as reporting requirements tighten, institutional use of climate data deepens, and policy tools evolve.

The priorities are clear:

• Ensure disclosures are comprehensive, consistent, and aligned with TCFD (and future UK SRS requirements)

• Set emissions reduction targets, ideally with third-party validation

• Treat emerging disclosure requirements as an opportunity to strengthen market positioning

The firms that communicate credible, forward-looking transition strategies most effectively are likely to be better positioned as climate considerations become more embedded in financial decision-making.

Conclusion

The relationship between climate disclosure and the cost of capital is no longer just theoretical.

This evidence shows that even a relatively small policy intervention can shift bond pricing in ways that reward transparency and forward-looking transition commitments.

More fundamentally, it suggests that central banks need not just be passive observers of how climate transition is priced. They can also play an active role in shaping that pricing through the design of their operations.

As disclosure frameworks evolve and institutional use of climate data deepens, the implications will only grow.

The companies — and policymakers — that engage seriously with disclosure quality now will be best placed for what comes next.