A commentary on Jens Weidmann’s speech from 2 June 2021
The FAZ recently postulated a U-turn by Bundesbank President Jens Weidmann regarding the role of central banks in the fight against the climate crisis. Will the ECB now become “green” and the KoalaKollektiv superfluous?
Interim successes should be celebrated, including this one: Pressure on the Bundesbank helps! Jens Weidmann seems to have given up his obstructionist stance in the ECB Governing Council. The central banks are discussing concrete measures to meet their responsibility regarding the climate crisis. This is a good thing!
It is remarkable that Jens Weidmann, of all people, has come up with concrete proposals on climate protection. We remember all too well the early days of ECB President Christine Lagarde, when Weidmann quickly and clearly positioned himself against green monetary policy. It was not for nothing that the German Bundesbank recently received the Best Climate Killer Award in the category of central banks for its obstructionist role in the ECB Governing Council on climate issues. So there is no reason to immediately proclaim Jens Weidmann the new climate saviour, as Christian Siedenbiedel of the FAZ does.
The fact that the Bundesbank president is now urging the ECB to take climate risks into account when buying bonds is a step in the right direction – albeit a small one. For the ECB to be celebrated as a pioneer in combating the climate crisis, it would need much more.
Above all, speed is needed, because the climate crisis is advancing unchecked. But instead of taking direct action and excluding sectors from bond purchases that are hostile to the future, Weidmann is just considering that central banks could do so if rating agencies do not take climate risks into account “quickly enough”.
Dear Mr Weidmann, there is no time to wait for rating agencies while droughts and floods spread. The time to act is now!
What is also extraordinary is not so much Weidmann’s proposal to price in climate risks, but rather the scandal that the ECB has not yet done so. What is still missing is a transparent strategy on how the ECB will bring its entire monetary policy in line with the 1.5 degree limit.
So perhaps Weidmann’s latest tones are merely a half-hearted attempt to avoid receiving the Best Climate Killer Award again next year? However, his head of communications Michael Best should know that this requires more than fine words.
Above all, it needs measurable action and changes that also affect bank refinancing and regulatory measures.
Far-reaching ideas are already being discussed in the financial sector.
Reclaim Finance, Friends of the Earth France and the Rousseau Institute published a new report in June that shows how the ongoing financing of the climate crisis could lead to a financial crisis. It also proposes solutions that address the ECB in particular.
Furthermore, a new legal analysis comissioned by Greenpeace Germany and authored by Roda Verheyen revealed that Europe’s central banks are obliged to take climate action and to factor climate protection into their monetary policy. This is a duty because climate protection is a human right and a fundamental principle of the European Union, its member states and its institutions.
Conclusion: We are staying tuned and demanding that binding, transparent exclusion criteria for future-destroying asset purchases are not only proposed, but also implemented within the framework of the Corona aid packages.
This first and long overdue step must be followed by a comprehensive, multi-step plan to align monetary policy with the 1.5 degree limit.