On September 19<\/span><\/b>th<\/span><\/b> 2022, the European Central Bank (ECB) <\/span><\/b>published information<\/b><\/a><\/span> (1) on the criteria it will start using from October 1<\/span><\/b>st<\/span><\/b> to \u201cgreen\u201d its corporate asset purchases. While the decarbonization of asset purchases was the main climate announcement made by the central bank in its \u201cclimate roadmap\u201d (2), the criteria defined will not end its support to major polluters \u2013 including fossil fuel developers. The ECB ignores the recommendations of NGOs and risks failing its own climate pledges.<\/span><\/b>\u00a0<\/span><\/p>\n<\/div><\/div><\/div> The methodology chosen by the ECB fails to integrate <\/span>the recommendations of NGOs<\/a><\/span> to ensure a meaningful decarbonization of assets. The scoring grid based on climate reporting, past emissions and climate targets leads solely to tilting, and therefore does not contain any exclusion. This means even the worst polluters – including fossil fuel developers – will still be accepted under the purchase programs.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n Beyond the lack of exclusion, the scoring system <\/span>could enable polluters<\/a><\/span> to fair quite well as it blends different types of indicators. For example, a company that emits relatively less than the average for\u00a0other companies in the same sector and that disclose sufficient information on its climate impact could have a decent score even if it lacks meaningful decarbonization plans and remains a massive emitter. This could notably be the case for fossil fuel companies that are often under pressure to report extensively on their emissions but remain some of the biggest contributors to global warming and keep developing new fossil fuel projects. <\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n Furthermore, the ECB did not disclose the benchmarks it will use to evaluate the alignment of companies\u2019 targets with the Paris Agreement and their level of disclosure. This could significantly impact the scores of companies, as many different climate target and reporting standards of varying quality exist, and\u00a0help polluting companies reach higher scores.\u00a0 <\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n In many ways, the ECB’s methodology is similar to the one implemented by <\/span>the Bank of England (BoE)<\/a><\/span> in 2021 which contained some stricter criteria (notably on coal) but nonetheless failed to achieve its environmental objectives. By also relying on a scoring grid that blends several types of criteria together, the BoE did not reduce its support to carbon intensive companies. \u202f<\/span>\u00a0<\/span><\/p>\n<\/div> Concretely, the ECB’s methodology firmly belongs to a narrow-minded financial risk approach. It does not account for the need to align asset purchases with EU climate goals and therefore does not satisfy the ECB’s pledges. <\/span><\/b>In order to really \u201csupport the green transition of the economy in line with the EU\u2019s climate neutrality objectives\u201d as affirmed in its <\/span><\/b>press release<\/span><\/span><\/b><\/a>,<\/span> the ECB should review its methodology so as to prioritize carbon neutrality over market neutrality.\u00a0<\/span><\/b>\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div>