Dhe environmental protection organization Greenpeace had the climate protection plan, with which the European Central Bank (ECB) has been wanting to include climate protection aspects in its actions for some time, examined in a study – and came to very critical conclusions. “The ECB has set itself noble climate goals, but in order to achieve them, they urgently need to improve their implementation,” said Greenpeace finance expert Mauricio Vargas: “If the central bank wants to remain credible, it must not be limited to cosmetic changes.” In particular The environmental organization is calling for companies such as the oil companies Total, Shell and Eni to be completely excluded from the monetary policy operations of the central bank. In the future, their papers should therefore not be accepted either for bond purchases or as collateral for loans.
The demands come in a historic situation for the central bank: At the end of June, the ECB stopped net purchases of new bonds, in July it raised interest rates for the first time in eleven years, and now on Thursday the second rate hike is to follow. However, the ECB continues to buy new bonds with money from maturing bonds, for example a conspicuous number of Italian ones in the government bond programs at times. For the “greening” of the central bank, i.e. the greener orientation, ECB Executive Board member Isabel Schnabel has presented a climate protection plan, which should have a direct impact on monetary policy bond purchases from October. The central bank calculates that around 30 billion euros flow back to it annually from maturing corporate bonds. These could be reinvested in the future, taking climate criteria into account.
The ECB wants to work with an internal scoring system that primarily provides three criteria: How high were the company’s emissions of greenhouse gases in the past? What plans are there to improve this? And: How transparently does the company deal with the burdens on the climate for which it is responsible?
According to Schnabel, the central bank consciously decided against an “exclusion approach” that would have completely excluded oil companies from bond purchases: It is precisely those companies that are still the least green today that are likely to have the most to change, they said. You don’t want to exclude them, but rather give them an incentive to become greener.
The Greenpeace study, produced by authors from SOAS University of London, the University of the West of England and the University of Greenwich, criticizes these plans. The authors come to the conclusion that the ECB will not be able to “decarbonize” its bond portfolio sufficiently in line with the 1.5-degree climate target, i.e. the CO2-Reduce the emissions of the company package if they do not completely abandon the previous principle of “market neutrality” when buying corporate bonds – in favor of the principle of “climate neutrality”. In simplified terms, market neutrality means that the ECB bases its bond purchases on the bond portfolios available on the market; She deviated from this with government bonds, but never gave up the principle.
The study now demands that the ECB should not only apply climate criteria when it comes to reinvesting maturing bonds. Rather, the entire bond portfolio must be scoured according to such criteria: “Instead of market neutrality, climate neutrality is required as the central guiding principle.” Even with the securities that are accepted by the central bank as collateral, there is a need for a stronger focus on the climate protection goal. “The ECB’s exclusive focus on climate risks within the rules for loan collateral does not go far enough – the ECB should instead focus consistently on the climate footprint of issuers,” the study says.
This debate also took place within the Governing Council of the ECB: Jens Weidmann, the former President of the Bundesbank, was particularly fond of explaining that the central bank must take climate risks into account, for example for banks; However, he was more skeptical about steps that would come closer to an active climate policy by the central bank.
The study goes on to say that the ECB should make itself more independent of the rating agencies when assessing the climate of the bonds. Instead, it is important to promote the development of in-house evaluation systems.
Greenpeace caused a stir last year when activists paraglided onto the roof of an annex to the ECB headquarters in Frankfurt to demonstrate for a greener monetary policy. Two men were therefore fined in early July for trespassing.
