The European Central Bank (ECB) had promised to green its ways of working. But because of the coronavirus, it is breaking this promise and supporting some of the worst fossil fuel polluters. Forty-five NGOs and think tanks have written to ECB President Christine Lagarde demanding action.
The COVID-19 crisis has turned the accepted logic of what is possible for governments and central banks in Europe onto its head – with the European Central Bank (ECB) being no exception.
Having promised to inject €1.1 trillion more in quantitative easing to the economy, the ECB seems prepared to act at scale to prevent this economic crisis turning into a social crisis – on the surface at least.
But just like in the past, the ECB’s reaction to this crisis is climate-blind. Previous research by Positive Money Europe has shown the ECB’s quantitative easing programme is benefitting to the most polluting companies in Europe, including those extracting and burning fossil fuels. The ECB’s new measures still have zero environmental conditions attached, instead, they are making this problem even bigger.
A window of opportunity for the ECB to green its working practices exists, but we fear it is closing. Last December, following an initial letter in November to Lagarde, the ECB President had promised us a strategic review of ECB operations. But this has now been postponed for six months, and in the meantime, the ECB is improvising big decisions which could make the climate crisis worse in the long run.
For this reason, 45 think-tanks and NGOs have sent a letter to Lagarde today demanding the dangers which climate change poses to the global economy are treated with the same immediacy as the coronavirus crisis. Positive Money Europe signed the letter, together with major international NGOs such as Oxfam and Greenpeace.
The letter advises the ECB to take the following five steps:
1. Align its asset purchasing programmes and collateral frameworks with the Paris Climate Agreement, to support the low carbon transition.
2. Align its refinancing operations to the banking sector with the Paris Agreement to help boost sustainable bank lending and fill the green investment gap.
3. Support asset markets for sustainable investment and coordinate operations with the European Investment Bank (or other equivalent European institutions) to ramp up green investment and lock-in a low carbon future.
4. Implement prudential measures to increase the resilience of the European banking sector to climate risks and reduce brown financial flows (e.g. financing of fossil fuels)
5. Lead by example on climate disclosures and transparency by assessing and regularly communicating to elected officials alignment of its operations with the Paris Agreement and that of the European Banking sector.
Actions addressing our five steps must not only be included in any strategic review when it begins but should be at the forefront of the ‘hand-to-mouth’ decisions taken before the review gets underway.
Now is the time to make these demands. The ECB’s Governing Council is meeting today to discuss how the institution will respond to the crisis going forward. Positive Money Europe will not be letting the ECB off the hook, and we hope you won’t either.
If you want to get involved, you can drop a line to Christine Lagarde herself through this letter-writing campaign, run by our allies 350.org. Together, we can all play a role in holding the ECB to account, and make sure that any economic vaccines for the coronavirus crisis do not further provoke the climate crisis further down the line.
You can read detailed recommendations to the ECB in a policy paper developed by the consortium of NGOs here.