29. July 2021

A Milestone With Flaws: The ECB’s New Strategy

On July 8th 2021, the #ECB released its eagerly-awaited new strategy. #ClimateChange is one of its major features. Time to celebrate?

The new strategy is definitely a turning point: After decades of blindness to environmental concerns, the ECB will take the climate threat seriously and commits to “more systematically reflect environmental sustainability considerations in its monetary policy”. It finally acknowledges that climate integration is required by both its primary and secondary mandates.

This big step would not have been possible without the tenacious campaigns and evocative reports of international NGOs and without our onsite actions that created medial attention.

However, ECB‘s working groups start discussing potential future measures, while real floods are causing deaths and damages throughout Europe. 31 years after the first IPCC report on climate change and six years after the ParisAgreement, ECB‘s decisions come late, the measures fall short and their implementation schedule is far too slow.

The climate crisis is already here. But the ECB is taking its time.

The envisioned measures will be prepared in 2021 and 2022 and will not be implemented before 2023. For corporate asset purchases, this means that the ECB will continue to support highly polluting companies for at least 1,5 years. Moreover, the bank uses worryingly imprecise words for the adjustment of its purchases. That could allow it to continue supporting climate killers even longer!

Europe is drowning. The time to act is NOW!

The ECB must not continue to lag behind. We need appropriate measures now:

Recommendation 1: immediately cut support to companies at odds with the EU GHG reductiontargets and Paris Agreement and strive to support EU objectives by:

  • Aligning the collateral framework with EU climate objectives and the Paris Agreement;
  • Adjusting corporate asset purchases using a dual exclusion and tilting approach, notably excluding companies at odds with the green transition – in particular companies that develop fossil fuels;
  • Using refinancing operations to contribute to EU climate objectives, for example building energy efficiency.

Recommendation 2: act now based on the information available to mitigate climate-related risks, take precautionary measures before detailed solutions are put in place and address the climate emergency by:

  • Accelerating the overall implementation timeline;
  • Immediately excluding fossil fuel companies that do not align with the Paris Agreement17 – notably companies developing fossil fuel projects from corporate asset purchases while waiting for the ECB’s decarbonization approach to be ready;
  • Adopting and championing a precautionary approach to climate risks and adapting all operations as soon as possible to reflect the asset stranding risk;
  • Confirming the integration of climate risk metrics into the ECB’s own ratings.

The ECB continues to support climate-damaging companies. And will not change this in the coming years.

For more details

→ joint statement with ReclaimFinance, Greenpeace and 350 https://reclaimfinance.org/site/wp-content/uploads/2021/07/Statement-ECB-climate-strategy-RF-GP-350-Koala.pdf 

→ Reclaim Finance’s analysis: http://reclaimfinance.org/site/en/2021/07/08/the-ecb-takes-a-raincheck-on-urgent-climate-action/