In July 2020, Christine Lagarde, the President of the European Central Bank (ECB), promised to explore every avenue for greening the ECB’s operations, including the asset purchase scheme undertaken to help stimulate the Eurozone economy. Indeed, the rapid and profound economic devastation brought on by the coronavirus pandemic illustrates the vulnerability of our economies to catastrophic shocks and should prompt central banks to hasten progress towards a low-carbon transition. The ECB simply cannot afford to address one crisis whilst neglecting – if not worsening – another.
The authors of this report, argue that the ECB should adopt alternative low-carbon strategies. They suggest two such strategies in which carbon-intensive bonds are replaced with more climate-friendly bonds. These strategies would significantly reduce the climate footprint of the ECB corporate Quantitative Easing (QE) and would make companies’ access to finance more aligned with the targets of the Paris Agreement.