Henrike Hahn, Member of the European Parliament (The Greens/EFA), substitute member of the Economic and Monetary Affairs Committee and shadow rapporteur in ECON on the ECB's Annual Report for 2021, comments on the measures announced today by the ECB to combat climate change:
"The European Central Bank is finally getting serious about green monetary policy to combat climate change. The measures announced today to take climate change into account in corporate bond purchases, the collateral framework and the disclosure requirements will have a hugely positive impact on the banking sector.
Banks will have to comply with the ECB's new climate standards in the future if they want to continue to have access to the ECB's cheap money. This will be a great incentive for European banks to make their portfolios more environmentally friendly. The ECB is making a valuable contribution in the fight against climate change.
It is an important sign for our climate that the ECB is making its monetary policy greener and contributing to the transformation of the European economy. Now it is up to the ECB to set clear and measurable targets for these objectives in order to give understandable and clear signals to the financial sector."
The ECB plans to limit the share of bonds issued by companies with a high carbon footprint that banks can deposit as collateral with the ECB. The new rules on collateral would by far be the most ambitious in the world of central banking.
The ECB will make major adjustments to its corporate bond portfolio, greatly increasing the share of bonds issued by companies with better carbon footprints.
In addition, ECB companies and debtors covered by the new Corporate Sustainable Reporting Directive will only be able to place bonds as collateral with the ECB if they comply with the new Directive.
Rating agencies will be urged to be more transparent in the future about how they incorporate climate risks in their ratings and to be more ambitious in their climate risk disclosure.