European Central Bank 'to consider climate impact'

By agency reporter
July 12, 2018

President Mario Draghi of the European Central Bank (ECB) has suggested that the European Central Bank (ECB) will look into conducting a climate assessment of its quantitative easing programme.

After a letter drawn up by the New Economics Foundation (NEF) and Positive Money EU ( signed by more than 50 NGOs), which called on central banks to account for climate risks in their analytical frameworks and operations was cited by MEPs, President Draghi stated: “To my understanding we don’t have analysis of our programme, or climate change considerations in our programme but I can certainly say we will look into this and see what’s the effect.”

Reacting to this, Frank Van Lerven, author of the letter and NEF Economist, said: “NEF welcomes President Draghi’s commitment to examining the climate impact of the ECB’s colossal quantitative easing programme. 

“The ECB holds nearly half a trillion euros worth of private sector financial assets on its balance sheet that are heavily skewed towards carbon-intensive activities. ECB policy inadvertently subsidises carbon intensive activities and risks reinforcing the current‘carbon lock-in’ of energy systems centred upon fossil fuels, endangering financial stability and undermining the Paris Climate Agreement. 

“A climate assessment of its quantitative easing programme could represent a fundamental turning point, where monetary policy is better aligned with the financial stability risks posed by climate change and the urgent need for a sustainable low carbon transition.” 

* New Economics Foundation https://neweconomics.org/

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