This analysis of the European Central Bank’s corporate bonds portfolio reveals a worrying gap between the ECB’s quantitative easing programme and the European Union’s climate objectives.

Today Positive Money Europe is publishing the English version of a report co-written by Stanislas Jourdan (Positive Money Europe) and Wojtek Kalinowski (Veblen Institute) which includes an exclusive analysis of the corporate-sector purchase programme (CSPP) by the European Central Bank (ECB). The report was published in French on 21 March 2019 and covered in Le Monde.

Positive Money Europe has been very vocal in the criticism over the climate impact of the CSPP. As early as July 2016, we expressed concerns that the programme would primarily benefit multinational corporations. In December 2016, Positive Money Europe, Corporate Europe Observatory and Friends of the Earth Europe warned for the first time about the possible damaging impact of CSPP for the environment. Those concerns were only repeatedly echoed ever since by more than 75 NGOs, the European Parliament and academics.

In this new report, we confirm and deepen the analysis previously produced by the Grantham Institute and others, which already pointed to a mismatch between the EU’s climate objectives and the CSPP program. Our new study shows that the Eurosystem invests more than 110 billion euros (or nearly 63% of the program) towards the four sectors that contribute the most to global warming (fossil fuel extraction and distribution, the automotive sector, the most energy-intensive industries, electricity generation). We also compare the portfolios of the six national central banks that have been tasked with implementing CSPP.

While the dominant share of the most polluting sectors in the CSPP portfolio is certainly in line with the ECB’s objective of market neutrality, it is nevertheless odd from the point of view of the ecological transition. CSPP results in making the cost of capital too cheap for the most polluting sectors, without any guarantee that these financial conditions help or encourage those companies to engage in a transformation of their underlying economic models.

Our recommendations

The report argues the ECB should take the following measures:

  • Implement mandatory disclosure of the carbon footprint for the 280 companies benefiting from the CSPP;
  • Stop relying on credit ratings agencies that have not included a carbon footprint criterion in their ratings;
  • Gradually reduce the share of the most polluting sectors during the reinvestment phase of the CSPP. The ECB must disengage from purchasing the most carbon-intensive assets and buy more green bonds or climate-neutral assets;
  • Integrate environmental criteria into refinancing operations via the collateral eligibility framework: additional haircuts must be implemented for the most carbon-intensive assets.

Click here to download the report

Note: Our analysis and recommendations are based on a study conducted by two researchers specializing in climate risk assessment, Stefano Battiston (FINEXUS Center for Financial Networks and Sustainability at the University of Zurich) and Irene Monasterolo (Vienna University of Economic and Business). On the FINEXUS website, they provide more information about their methodology, and a visual interface enabling to see the in-details composition of the CSPP portfolio.


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