Parliament urges ECB to put climate at heart of strategy review
14 February 2020 | Mitigation
EU lawmakers have called on the European Central Bank (ECB) to put climate change at the centre of the bank’s review of its monetary policy strategy this year, endorsing the bank’s chief vision for “gradually eliminating” carbon assets.
The European Parliament voted by a large majority for a resolution recommending the ECB looks at ways in which central banks can tackle the climate crisis and help drive the continent’s decarbonisation.
452 MEPs from across the political spectrum voted in favour of the resolution as 142 lawmakers, including far-right parties, opposed the text during a vote in Strasbourg on Wednesday.
While the text bears no legal implications, it is a strong political signal of lawmakers’ support for ECB plans to assess and take into account climate risks.
The ECB is undergoing a strategic review this year and recommendations could be presented to the bank’s board of directors before the start of the UN climate talks, or COP26, in November.
The resolution suggested the ECB – one of the most powerful economic institutions in Europe – make the question of “how central banking can contribute to a sustainable economy and the fight against climate change one of its research priorities”.
It also raised concerns that “62.1 % of the ECB corporate bond purchases take place in the sectors that are responsible for 58.5 % of euro area greenhouse gas emissions” and called on the bank to assess the impact of its asset purchase programme on climate action.
ECB “monitoring systematic risk stemming from climate change”
During a hearing ahead of her confirmation as ECB president last year, Christine Lagarde told lawmakers the bank should “move to a gradual transition to eliminate” carbon assets from its portfolios.
In her remarks to the European Parliament on Tuesday, Lagarde said the ECB needed to take climate change into account when considering its policies and operations.
“But nobody can ask the ECB to substitute what governments should do and what policies should be,” she said.
Lagarde said the bank’s review would help it decide when and how climate action and risk have an impact on the ECB’s policies, including price stability, risk management and the composition of portfolios.
She added the ECB was already working to expand its knowledge of the economic impact of climate change and how it reflected in its forecasting models and analysis.
“The ECB is monitoring systematic risk stemming from climate change and the transition to a carbon neutral economy,” she told MEPs.
The resolution adopted by the parliament also called on the bank to “implement the environmental, social and governance principles into its policies”.
Lawmakers recalled that the ECB is “bound by the Paris Agreement” and that the accord “should be reflected in its policies”.