The European Central Bank (ECB) is taking very specific steps to take climate protection more into account in monetary policy.

As the central bank announced on Monday, the Governing Council of the ECB has decided to reinvest bonds from its corporate bond purchase program that are maturing as early as October, based on climate protection criteria.

According to information from ECB Executive Board member Isabel Schnabel, around 30 billion euros flow back to the central bank from maturing bonds of this type - part of this is to be reinvested according to green criteria in the future.

Christian Siedenbiedel

Editor in Business.

  • Follow I follow

The central bank wants to use an internal scoring system that primarily takes into account three criteria: How high were the company's emissions of greenhouse gases in the past?

What plans does the company have to improve this?

And: How transparently does the company deal with the burdens on the climate for which it is responsible?

Schnabel: a “milestone”

"With these decisions, we are delivering on our commitment to fight climate change," stressed ECB President Christine Lagarde.

Schnabel spoke of a "milestone".

The ECB reports that there were “many discussions” before the decision was made.

The steps that have now been decided are part of a roadmap for "greening" the central bank, i.e. for its stronger orientation towards aspects of climate protection, which dates back to last year.

But they have only just been decided in concrete terms.

When asked at a press conference, Schnabel explained that companies with a strong connection to fossil fuels, such as the mineral oil company Shell, should not be completely excluded from bond purchases in the future.

The decision was made against an “exclusion approach”, said Schnabel: It is precisely the companies that are still the least green today that are likely to have the most to change, and we do not want to exclude them, but rather give them an incentive to become greener.

Among monetary policy experts, the inclusion of bond purchases in the central bank's "greening" was more controversial than, for example, the consideration of climate risks in banking supervision.

The former President of the Bundesbank, Jens Weidmann, pointed out the danger that the central bank might be too hesitant to later part with bonds that it had acquired from a green point of view to promote climate-friendly companies, if this was necessary from a monetary policy point of view.

In terms of monetary policy, the ECB actually phased out its net bond purchases a few days ago.

Now only maturing old bonds are to be replaced, the total volume is not to increase any more.

The central bank then announced the first rate hike for July 21, with a second to follow in September.

In the event that the yields on European government bonds then diverge and there is turbulence, she wants to use a new tool, the so-called anti-fragmentation tool.

Government bonds are to be bought in a targeted manner from countries whose yields are deviating too quickly or too much from the yields on German Bunds.

The "green" bond purchases now, however, should be about corporate bonds, not government bonds, as emphasized by ECB Executive Board members Schnabel and Frank Elderson.

There will therefore be no collisions with the planned anti-fragmentation instrument.

Keywords: