Macron calls for debate on tasking ECB with explicit climate role

April 30, 2024|Written by Katy Lee|European Central Bank

French president Emmanuel Macron has urged fellow European leaders to consider tasking the European Central Bank (ECB) with an explicit role in tackling climate change, in a move welcomed by campaigners.

In a wide-ranging speech setting out his vision for Europe at the Sorbonne University in Paris on Thursday, Macron argued that the scale of the climate crisis called for a more active role for the ECB, given the powerful tools at its disposal.

“We cannot have a monetary policy whose sole objective is an inflation target, not least in an economic environment where decarbonisation is a factor in increasing structural prices,” Macron said, referring to growing evidence of the impact of climate change on price stability.

“We need a theoretical and political debate on how to integrate a growth objective into the objectives of the European Central Bank, or even a decarbonisation objective – in any case, a climate objective for our economies. It is absolutely essential.”

Economists and environmental campaigners alike have long pointed out that the ECB’s existing mandate includes a role beyond simply managing inflation.

“President Macron’s comments are an important reminder that the ECB already has a broader mandate,” said Alexander Barkawi, director of the Council on Economic Policies thinktank.

“While its primary objective is price stability, the ECB is also tasked, without prejudice to its primary goal, to support the general economic policies in the European Union to contribute to the achievement of the Union’s objectives,” Barkawi told Green Central Banking.

“These include, among others, full employment, social progress and a high level of protection of the environment. While these secondary objectives have often been ignored in the past, they are increasingly acknowledged by the ECB as a duty, not an option. It is good to see President Macron putting a spotlight on this.”

Uuree Batsaikhan, head of research at campaign group Positive Money Europe, said that changing the ECB’s mandate would require changes to the EU’s treaties, which would be difficult to secure.

“What is perhaps less difficult and necessary in the short-term is to empower the new European Parliament to push the ECB to take on a more active role in tackling climate change,” Batsaikhan said, ahead of European elections in June.

The ECB has made significant developments in its green policy in recent years, including by accounting for climate change in its corporate bond purchases and applying additional capital requirements to banks that fail to effectively manage environmental risks.

The ECB currently ranks fourth on the Green Central Banking Scorecard, which ranks the environmental macroeconomic policies of G20 countries.

Macron’s intervention comes ahead of a planned discussion on the ECB’s environmental initiatives at a strategic meeting in Ireland on 21-22 May.

This page was last updated April 30, 2024

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