The Covid-19 crisis should have been the European Central Bank’s (ECB) climate action wake up call. Several central bankers, notably the French central bank, draw a parallel between the Covid crisis and climate change. They warned that the crisis we are facing can be considered a stress test for future climate-related crisis. ECB’s response was a unique opportunity to finally direct monetary operations toward climate action. Yet, rather than changing course, the ECB stuck to its old ways. Same causes producing same effects, the ECB historic response offered massive support to polluters.
Nonetheless, thanks to the mobilization of citizens and the work of NGOs and researchers, 2020 became a pivotal year: central bankers that refuse to consider climate are marginalized, key ECB players are reassessing their longstanding principles – including “market neutrality“, and central banks conduct researches aiming at reducing the support they provide to polluting activities (notably regarding asset purchases and refinancing operations). In a word, it is now expected that the ECB start integrating climate. However, major uncertainties remain:
1. When will the bank take action, notably by stopping the purchase of the assets of polluting companies? It could be as late as 2023-2025 according to the Governor of the French central bank..
2. Will the ECB’s decisions really make a difference by putting an end to its support to polluters and contributing to reaching European climate objectives? The ECB can still focus on reporting and climate risks or on supporting “green” assets, thus forgetting the concrete support it provides to polluting activities and companies.