On July 8th 2021, the ECB released its eagerly-awaited new strategy. While this strategy is a turning point that puts an end to decades of blindness to environmental concerns, the concrete actions put forward by the central bank fall short in several instances, with major gaps and uncertainties and a slow implementation timeline. Three days before the first monetary policy meeting (on July 22nd) held by ECB leaders since the adoption of their strategy, Reclaim Finance, Greenpeace, 350.org and the Koala Kollektiv release a statement highlighting key recommendations to leverage a transformation from climate consciousness to climate action.
As ECB leaders hinted before the publication of their new strategy, climate change is one of its major features, with a roadmap dedicated to related actions. This is a turning point: putting an end to decades of blindness to environmental concerns, the central bank will strive to consider the climate threat and commits to “more systematically reflect environmental sustainability considerations in its monetary policy”. Confirming ECB board members’ statements, the ECB acknowledges that climate integration is required by both its primary and secondary mandates.
However, 31 years after the first IPCC report on climate change and six years after COP21, the ECB is already behind schedule when it comes to addressing climate change. The strength of its new commitment should be measured by the actions it implies and their implementation timeline. Unfortunately, here the bank’s roadmap falls short in several instances, all short in several instances, with a weak stance on fossil fuels, no changes to its collateral framework and a slow implementation timeline. Changes to the ECB’s climate roadmap are necessary to both truly fulfill its mandate and address the climate emergency.
In its statement, the four civil society organizations puts forward two sets of recommendations to leverage the ECB’s new strategy:
- Work for (and no longer against) EU objectives, by immediately cutting support to companies at odds with EU GHG reduction targets and striving to support EU objectives. This includes the exclusion of companies that develop fossil fuel projects from the ECB’s asset purchases and collateral framework, in line with the climate science and recent IEA Net-zero scenario.
- Consider the climate emergency and the risks it represents, by acting now based on the information available to mitigate climate-related risks and taking precautionary measures before detailed solutions are put in place. This entails an overall acceleration of the implementation timeline of the ECB’s proposals as well as specific measures to tackle the risk concentrated in fossil fuel assets.
Paul Schreiber, Campaigner at Reclaim Finance, remarked: “The ECB’s new climate strategy marks a welcome awakening to climate issues. Sadly the bank is behind the times, which demand not just acknowledgement of the issues but urgent action to tackle them. In this regard, the strategy is desperately thin. Under its plan, the ECB will continue to support polluters for at least several years, fail to align itself with EU climate goals, and only move towards implementation at a snail’s pace. Our recommendations would help the ECB to meet the scale of the challenge by contributing to the alignment of the EU’s financial system with the Paris Agreement.”