This weekend the Council of the European Central Bank (ECB) is meeting for an exciting closed meeting.

From Thursday evening to Sunday afternoon, Europe's central bankers want to discuss the strategic realignment of the ECB.

It's about a lot: Council members in particular hope for a consensus on the controversial questions about a greener orientation of the central bank.

Christian Siedenbiedel

Editor in business.

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    In the past week, many council members publicly took up position for this. ECB Executive Board member Isabel Schnabel, for example, emphasized in a speech on Monday that the previous criteria for the ECB's bond purchases may be inappropriate for climate-damaging companies.

    On Thursday, the environmental protection organization Greenpeace rushed forward. The organization presented a legal opinion by Roda Verheyen, judge at the Hamburg Constitutional Court. According to their assessment, this states that the ECB is not only allowed to take climate targets into account, but that it is even obliged to do so. In order to emphasize this assessment, the organization referred to a lawsuit in Belgium, which had precisely this question on the subject. The plaintiff is the environmental organization ClientEarth, while the defendant is initially the Belgian central bank as part of the Eurosystem. With the action, however, an application for a reference to the European Court of Justice was submitted. Only this court can ultimately decide whether the central bank's bond purchases are compatible with the European Union's climate targets.

    Greenpeace hopes for approval from the board of directors

    In the event that the internal deliberations of the ECB were just as unsatisfactory from the point of view of the organization as the lawsuit in Belgium, Greenpeace did not rule out its own legal action on the basis of the expert opinion.

    The organization referred, among other things, to the most recent judgment against the oil company Shell in the Netherlands, which impressively demonstrated the existence of climate-related risks for companies and thus also their bonds.

    The ECB must also take this into account.

    The advance of the environmental protection organization does not seem hopeless because Greenpeace is likely to meet with a lot of approval in the ECB board of directors. In the past, resistance was more likely to come from Bundesbank President Jens Weidmann, said Greenpeace finance expert Mauricio Vargas. But Weidmann also “moved”. The Bundesbank President recently admitted that if the rating agencies did not include climate risks in their ratings quickly enough, the central bank could limit the maturities or the number of bonds from certain sectors or issuers. So don't buy more “green” bonds, but less “brown” ones - more precisely: fewer bonds with climate-related risks.

    The Greenpeace legal opinion now starts with the argument that the independence of the central bank and its goal of price stability do not allow climate issues to be given greater consideration.

    It says: "The constitutional independence of the ECB represents a central element of the question to what extent an obligation to neutrality and thus a contradiction in support of economic policy goals can be derived from this."

    No unlimited freedom of design

    However, the report proves that independence does not guarantee unlimited leeway in shaping monetary policy, but that the ECB, despite its independence, is subject to the so-called cross-sectional clause under Article 11 of the Treaties on the Functioning of the European Union (TFEU). "The cross-sectional clause regulates that EU bodies and thus also the ECB must not ignore the requirements of environmental protection." respect their policies and actions in various fields. The Paris Climate Agreement also sets a binding framework under international law, which specifically addresses the flow of funds.

    "According to the Commission and Parliament, the ECB is directly bound by the Paris Climate Agreement, since it is a party to the EU as an organ," says the report: "The Paris Agreement has been adopted by the EU and is therefore part of the Union's legal system." Other normative legal acts which oblige the ECB to take climate protection goals into account can be found in the European Charter of Fundamental Rights and in the resolutions on the European Green Deal. The Bundesbank must also examine what discretion it has in order to enforce the environmental protection obligation set out in Article 20a of the Basic Law.

    In summary, it can be said that climate protection has become a human right and a constitutive principle of the European Union and its member states, the report concludes. All of this raises the question of whether the ECB or the Bundesbank could possibly be held responsible in court for neglecting the necessary measures to bring monetary policy in line with political efforts to protect the climate. In Germany, complainants have the option of filing a constitutional complaint that is linked to a decision by the Bundesbank or the Eurosystem.