The ECB and Climate Change: Outlining a Vision for Success

This policy brief – jointly published by the New Economics Foundation, Positive Money Europe and 350.org – recommends that the European Central Bank (ECB) must align its asset purchasing programmes, collateral frameworks and refinancing operations with the Paris Agreement. It must also support sustainable asset markets and reduce the financing of fossil fuels.

Both the European Parliament and the ECB have acknowledged that the ECB is bound by the Paris agreement, which requires the redirection of finance flows to be “consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”. However, European financial markets are currently on track to fund a global temperature rise of over 4ºC and have not priced in the risks associated with climate change. As the ECB conducts its first major strategy and policy review since 2003, this brief from leading NGOs shows how the ECB can decarbonise its activities and reduce the risk of systemic climate catastrophe.

The brief details five recommendations for the ECB:

1. Align its asset purchasing programmes and collateral frameworks with the Paris climate agreement
2. Align its refinancing operations to the banking sector with the Paris agreement to encourage more sustainable bank lending and fill the green investment gap
3. Support asset markets for sustainable investment and coordinate operations with the European Investment Bank to ramp up green investment and lock-in a low carbon future
4. Implement prudential measures to increase the resilience of European banks to climate risks and to reduce the financing of fossil fuels
5. Lead by example on climate disclosures and transparency