Monday May 18th 2020 – While Governors will meet on June 4th to decide of the evolution of the monetary response to Covid-19, Reclaim Finance publishes a report revealing that the ECB’s corporate asset purchases significantly finances all fossil fuels. The report supports the plea of a growing number of civil society members for a green and united recovery, with specific measures to align quantitative easing with European climate objectives. Reclaim Finance calls on the Eurosystem governors to put an end to asset purchases of fossil fuel companies on June 4th. 

The report entitled “Quantitative easing and climate : the ECB’s dirty secret”, which studies the ECB’s list of corporate holdings (CSPP and PEPP), shows that quantitative easing strongly benefits to firms from the most polluting sectors (fossil fuels, air and automobile sectors…). The ECB bought assets from 38 fossil fuel corporations. Of these corporations, 10 are active in the coal sector for a total installed power capacity of 66 000 MW, more than all of the French nuclear reactors. 

While billions deployed in response to the Covid crisis should go to the construction of a just and sustainable future, our research shows that the ECB is locking us in a high-carbon trajectory. It is unacceptable that the European quantitative easing finances corporations like Fortum, whose subsidiary entends to start a new German coal power plant and threatened the Netherlands of legal action to oppose its democratic decision to phase out coal by 2030. It has to stop, the ECB needs to immediately exclude the most polluting firms from its asset purchases and to require commitments to phase out coal and fossil fuels.” says Paul Schreiber, in charge of the supervision of financial actors at Reclaim Finance.

Coal is not the only problem: major oil and gas companies, including Shell and Total, that plan on increasing their productions respectively by 38% and 12% from 2018 to 2030, are on the list of assets bought by the ECB. Shell even plans on exploiting shale oil and gas reserves that amount to 12 times its current production in the area. Beyond fossil fuels, high-carbon activities are prominent in the ECB’s portfolio. Polluting companies account for 63% of corporate assets purchases, which could mean up to 132 billion for Covid-related asset purchases alone.

Our report demonstrates the urgency to put an end to the principle of “market neutrality” that guides asset purchases. Preserving this dogma means refusing to acknowledge the political dimension of monetary creation and is anachronic in a context of climate emergency. The governors’ next meeting, on June 4th, is the opportunity to address this issue. With 1100 billion in quantitative easing in 2020, the ECB cannot wait for the strategic review to end. It must exclude corporations whose practices are incompatible with the Paris Agreement from its asset purchases.” concludes Lucie Pinson, Director of Reclaim Finance.

Contact: Paul Schreiber – paul@reclaimfinance.org – +33689020788

Download the report