Brussels – The unsustainable sustainability of the European Central Bank: the European institution has espoused the EU’s green cause, also on account of the repercussions related to the effects of climate change on policy, the economy, and the labor market. But the choices seem to betray the mandate of the Eurotower, which observers and analysts see as making policy instead of monetary policy and acting on external impulse rather than its own.
Pointing the finger at the ECB is the European Parliament’s Think Tank, in a study on climate and monetary policy that does not smile at ECB President Christine Lagarde, who made more eco-friendliness a key point of her mandate.
Too bad that, according to the paper, “a central bank is not well placed to judge whether financing a brown enterprise (a corporate bond issue or a bank loan) would enable the continuation of high-emission activities or investment in emission reductions.” So flaunting that it would only support through lending activities in line with the goals of the European Green Deal would turn out to be just pure propaganda, as “greening the corporate sector purchase program (CSPP) represents much ado about very little.” To be able to understand what kind of activity one wants to pursue and to what extent it is eco-friendly requires “a detailed analysis of the overall financial structure and investment planning of the enterprise in question,” without which “the impact of greening on actual emissions is likely to be extremely small if not zero.”
So far, the ECB’s action appears to come more from the gut than the brain. From a practical point of view, stopping financing polluting companies in favor of greener economic actors is not a viable option. The European Parliament’s Think Tank merely emphasizes the need for focus on transition and to accompany today’s ‘brown’ emitters toward the low-emission ‘green’ model. Something that the ECB does not seem to have understood if a precise transition is needed in this regard. The premise is that in the EU, “a small number of high-emitting sectors dominate the emissions market as a whole.” These so-called ‘brown’ sectors — called this way precisely because of their high emissions intensity — “are the ones that most need capital to finance expensive investments to reduce emissions.” Therefore, it points out, “making access to capital more difficult for brown sectors could harm mitigation efforts.” Here, then, is the error in approach.
At any rate, according to the experts, the European Central Bank’s sustainability choices have little to do with monetary policy and risk undermining the institution’s independence. On the one hand, according to the study, “it is understandable that the ECB feels under pressure from the public and some NGOs to appear ‘green'” and attentive to the issue of sustainability. But, first and foremost, “providing cheaper access to finance for green businesses or sectors represents a use of public resources that has little to do with monetary policy.” Moreover, “the environmental benefits of caving in to this political pressure are likely to be negligible relative to the dangers to its independence.”
