Proposals

#3 ECB should “green” its quantitative easing programme

Many NGOs and think tanks have publicly denounced the European Central Bank (ECB)’s quantitative easing (QE) programme for fuelling climate change by favouring high-polluting companies. This is particularly the case for the 250 billion euros Corporate Sector Purchase Programme (CSPP), which benefits mostly carbon intensive companies. 

The reason for this is that the ECB has, until today, refused to add climate criteria to the eligibility conditions for the CSPP. Instead, the ECB follows a “market neutral” approach and purchases any bonds whose credit rating is above a certain threshold.

However, the ECB could take climate criteria into account when conducting asset purchases, so that the ECB does not disproportionately subsidise the companies that are the most responsible for climate change.

In practice, the ECB could establish an exclusion list for the most polluting companies such as coal and fossil fuel producers, and instead purchase more green bonds. 

➕ Pros

• The ECB would stop being part of the problem.
• It would signal a clear end of the status quo to financial investors.
• EU institutions must lead by example. It would reinforce coherence and credibility of the ECB (and EU) when encouraging Member States and commercial banks to target climate objectives.

➖ Cons

• It’s not the role of the ECB to assess what is green or not.
• It’s primarily the role of governments to penalize climate externalities of companies.
• There are not enough green bonds on the market.
• Giving additional objectives to the ECB risks overburdening the banks and creating too much expectations.