European lawmakers have called on the European Central Bank (ECB) to place climate change at the centre from the bank's overview of its monetary policy strategy this season, endorsing the bank’s chief vision for “gradually eliminating” carbon assets.
The European Parliament voted by a large majority for a resolution recommending the ECB examines ways that central banks can tackle the weather crisis and help drive the continent's decarbonisation.
452 MEPs from over the political spectrum voted in favour of the resolution as 142 lawmakers, including far-right parties, opposed the written text throughout a vote in Strasbourg on Wednesday.
While the text bears no legal implications, it's a strong political signal of lawmakers’ support for ECB plans to assess and take into account climate risks.
The ECB is undergoing a strategic review this year and suggestions could be given to the bank's board of directors prior to the start of UN climate talks, or Cop26, in November.
The resolution suggested the ECB – one of the most powerful economic institutions in Europe – make the question of “how central banking can contribute to a sustainable economy and the fight against global warming certainly one of its research priorities”.
It also raised concerns that “62.1 % of the ECB corporate bond purchases occur in the sectors that are responsible for 58.5 % of euro area greenhouse gas emissions” and called around the bank to evaluate the impact of its asset purchase programme on climate action.
During a hearing in front of her confirmation as ECB president this past year, Christine Lagarde told lawmakers the bank should “move to some gradual transition to eliminate” carbon assets from the portfolios.
In her remarks towards the European Parliament on Tuesday, Lagarde said the ECB required to take global warming into account when it comes to its policies and operations.
“But nobody can ask the ECB to substitute what governments must do and just what policies ought to be,” she said.
Lagarde said the bank's review would help it decide how and when climate action and risk have an affect on the ECB's policies, including price stability, risk management and also the composition of portfolios.
She added the ECB was already working to expand its knowledge of the economic impact of global warming and just how it reflected in the forecasting models and analysis.
“The ECB is monitoring systematic risk stemming from global warming and also the transition to a carbon neutral economy,” she told MEPs.
Stanislas Jourdan, head of Positive Money Europe, an offer group that has required the ECB to complete more to promote green finance, told Climate Home News the adoption of the resolution was “big progress” and sent “a political approval” for Lagarde to press ahead by putting global warming in the middle of the bank's review.
“The ECB are now able to confidently start its strategic review, knowing there's agreement in principle the bank should play a role in the EU's climate strategy,” he said, adding the debate should move to evaluating how monetary instruments can support saving money transition.
The resolution adopted by the parliament also known as around the bank to “implement the environmental, social and governance principles into its policies”.
Lawmakers recalled that the ECB is “bound through the Paris Agreement” which the accord “should be reflected in the policies”.
Last week, a report by the London-based think tank New Economics Foundation estimated that leading central banks in the euro area, including in the united kingdom, the united states, Japan, China and Switzerland, own more than $12 billion in bonds and stocks exposed to coal.
In a debate around the ECB’s review in the European Parliament , Dutch MEP Paul Tang, a member of the Progressive Alliance of Socialists and Democrats, urged Lagarde to “make real progress now that you can”.
Sirpa Pietik”ainen, a Finnish lawmaker and a person in the conservative European People’s Party, thanked the ECB for “finally taking into account climate and environmental risk” and called on the bank and also the European Commission to operate to “harmonise” sustainable investments across both institutions.
MEP Piernicola Pedicini, of the 5 star Movement in Italy, said he would vote against the resolution.
“It is not enough to possess good intentions and to want to fight climate change to help the ECB fight the failure of the real economy,” he said.
The bank will formally react to the parliamentary resolution in the annual report in April.
