{"id":16211,"date":"2021-10-28T08:00:09","date_gmt":"2021-10-28T06:00:09","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=16211"},"modified":"2023-02-08T16:05:38","modified_gmt":"2023-02-08T15:05:38","slug":"infected-by-oil-and-gas-giants-a-short-story-of-ecbs-covid-asset-purchases","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2021\/10\/28\/infected-by-oil-and-gas-giants-a-short-story-of-ecbs-covid-asset-purchases\/","title":{"rendered":"Infected by oil and gas giants: a short story of ECB\u2019s covid asset purchases"},"content":{"rendered":"

In July 2021, the European Central Bank (ECB) unveiled its <\/span><\/span><\/span>1st climate roadmap<\/a><\/u><\/span><\/span>, allegedly taking the lead in the snail-pace race for the \u201cgreening\u201d of central banking. Throughout 2020 and 2021, just as it was building this roadmap and pledging its goodwill on climate issues, the bank was buying unprecedented amounts of assets in response to the Covid pandemic. While these exceptional purchases were an opportunity for the ECB to start putting its green promises into practice, the bank chose to go in the opposite direction. Indeed, covid-related corporate purchases notably <\/span>benefited to five oil and gas majors<\/a><\/u><\/span> – Shell, <\/span>TotalEnergies<\/span>, Repsol, Eni, OMV – despite their plans to massively develop their fossil fuel production<\/span><\/span>.<\/span><\/b><\/p>\n<\/div>

Responding to the Covid-19 pandemic, the ECB unveiled a massive asset purchases plan, pledging to buy a total 1.97 trillion euros worth of assets from 2020 to 2022. While the bulk of these purchases were directed at public sector assets, this unprecedented move triggered a 64% increase of ECB\u2019s holdings of private sector assets from March to September 2021 (1). <\/span>This 128.7 billion euros rise likely resulted in the purchase of about 15.3 billion euros of fossil fuel bonds and 80 billion euros bonds from carbon-intensive activities (2)<\/span><\/b>. <\/span><\/p>\n

While the ECB\u2019s refusal to provide more information on the value of its corporate purchases or on their environmental impact (3) makes it impossible to exactly know how much the bank spent on fossil fuel bonds, <\/span>new research<\/a><\/u> by Reclaim Finance reveals that covid-related purchases benefited to the five European oil and gas majors: Shell, TotalEnergies, Repsol, Eni, OMV<\/span><\/b>. <\/span><\/p>\n

From April 17<\/span><\/b>th<\/span><\/b> 2020 to September 3rd 2021, the number of bonds from these companies held by the ECB rose by 16.2%, to a total of 79. The ECB acquired 15 such bonds during the pandemic<\/span><\/b>. It notably acquired four bonds from TotalEnergies (+ 22.2%) and three from Eni (+ 20%). TotalEnergies is the main oil and gas major benefiting from ECB\u2019s purchases (22 bonds), followed by Eni (18 bonds) and Shell (17 bonds). <\/span>Some of the oil and gas majors\u2019 bonds held by the ECB won\u2019t be repaid before 2040 (4)<\/span><\/b>.<\/span><\/p>\n

Problem: these companies are some of the biggest carbon emitters in the world and their plans are at odds with the Paris Agreement and EU climate goals. According to <\/span>Carbon Tracker<\/a><\/u><\/span>, their planned investments in oil and gas production would drive us above a 2.7\u00b0C global warming. Shell, TotalEnergies, Repsol and Eni are aggressively betting on liquified natural gas, are involved in unconventional oil and gas and major expansion projects. <\/span>To summarize, supporting these companies means supporting fossil fuel expansion, and thus working against the Paris Agreement and EU climate goals<\/span><\/b>. <\/span><\/p>\n

The ECB knew this.<\/span><\/b> More than <\/span>170 000 Europeans<\/a><\/u><\/span> called on it to stop supporting big polluters, urging to use its Covid-provisions to \u201cbuild back better\u201d \u2013 not dirtier. NGOs called on it several times to adopt basic requirements to avoid seeing these asset purchases feeding the fossil fuel frenzy and testify of its goodwill on climate issues. In fact, the ECB itself increasingly became wary of the impacts of climate change, underling <\/span>the risks<\/span><\/a> it creates for the whole financial system and urging private financial institutions to consider them.. All the while it was buying asset from the UE’s top climate killers.<\/span><\/p>\n

The ECB\u2019s new climate roadmap is not solving the problem<\/span><\/b>. Incomplete, focused almost exclusively on financial risks and with a very slow implementation timeline, the ECB\u2019s strategy <\/span>falls short<\/span><\/a> on all counts. <\/span>It does not even guarantee that fossil fuel developers would be excluded from the bank’s asset purchases.. And if they were, it would only be in 2023 at the earliest (5<\/span><\/b>). <\/span><\/p>\n

For the ECB, <\/span>the first step is straightforward: excluding fossil fuel developers from its corporate asset purchases and collateral framework<\/span>. A small step, but an essential one to preserve the climate, and to be at least a little credible when talking about climate change.<\/span><\/b><\/p>\n<\/div><\/div><\/div>

Notes :
\n<\/u><\/b><\/p>\n

    \n
  1. From March 2020 to September 2021, its holdings under its corporate sector purchase program (CSPP) grew by 95 billion euros, about 47%. Simultaneously, the ECB bought 33.7 billion euros worth of corporate bonds through its new Pandemic Emergency Purchase Program (PEPP) created in March 2020.<\/span><\/li>\n
  2. This estimation is based on previous research by Yannis Dafermos and al \u2013 <\/span>Decarbonizing is easy<\/a><\/u><\/span> – that quantifies the share of ECB\u2019s corporate purchases going to various activities. As the ECB <\/span>refused to disclose<\/a><\/u><\/span> the value of the bonds it purchases or more detailed information about its global purchases of fossil fuel bonds, we are not able to provide a more precise estimate on the amounts of money spent by the ECB on carbon-intensive or fossil fuel bonds.<\/span><\/li>\n
  3. The ECB refused <\/span>several requests<\/a><\/u><\/span> from Reclaim Finance to disclose these information.<\/span><\/li>\n
  4. Some of TotalEnergies and Shell\u2019s bonds held by the ECB won\u2019t be repaid before 2040 and 2039 respectively. Similarly, the bank will keep bonds from Repsol, OMV and Eni until at least 2033, 2034 and 2031.<\/span><\/li>\n
  5. The shortcomings of the ECB\u2019s roadmap when it comes to purchasing bonds from major polluters is discussed in Reclaim Finance\u2019s briefing. <\/span><\/li>\n<\/ol>\n<\/div><\/div><\/div>

    Learn more<\/span> :<\/span><\/span>
    \n<\/u><\/b><\/p>\n