Beyond the strategy review: the ECB must act on climate

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

President of European Central Bank (ECB) Christine Lagarde during a family picture at the end of a meeting of Eurogroup Finance Ministers, at the European Council in Brussels, Belgium, 12 July 2021 [STEPHANIE LECOCQ / EPA-EFE]

The European Central Bank (ECB)’s new monetary policy is a positive step, but it needs more ambition to tackle its climate problem, warns a group of European lawmakers, environmental activists and economists.

The following opinion article is signed by lawmakers in the European Parliament, NGOs and economists, and coordinated by Marie Toussaint MEP (full list at the bottom).

Scientists warn us again and again: climate change is accelerating. Preliminary findings from the IPCC raise the alarm on the extremely worrying state of our climate, highlighting that humanity is not currently equipped to deal with the escalating consequences of rising global temperatures. If this is true of society, it is also true of the financial system.

According to a study published recently by several NGOs, the 11 largest European banks have more than €530 billion of assets linked to fossil fuels (coal, oil and gas). €530 billion represents around 95% of the equity of these banks. Rather than reducing their addiction to fossil fuels, EU banks actually increased their support to the sector between 2016 and 2020.

Yet if we want to limit global warming to 1.5°C above pre-industrial levels, we must leave at least 80% of fossil fuels in the ground and cut fossil fuel production by 6% a year between 2020 and 2030.

The assets that banks accumulate through their financing of climate destructive fossil fuels are both at odds with the energy transition and destined to lose value as the shift accelerates. The threat posed by fossil fuels-addicted banks is real and could slow down the whole ecological transition.

The global financial crisis of 2008 and the years of economic and social crisis that followed should have brought our economies to their senses. But the rising risks that fossil fuel assets pose to European banks prove that we have not learned our lesson.

We limit ourselves to ‘soft touch’ and non-binding regulation, even though financial institutions continue to prioritise profit at the expense of the planet and their own stability. The ECB gave a striking example of this when it acknowledged that 90% of banks are not aligned with its expectations on climate and environmental risks.

But the ECB itself has historically not set a good example. While it recognises that climate change poses a systemic risk and that this risk is more acute for “banks whose portfolios are concentrated in certain economic sectors”, it has long supported fossil fuel companies through its asset purchases and collateral framework.

By sticking to an allegedly neutral approach, the bank has helped perpetuate investments in polluting activities, thus working against the European Union’s climate objectives and increasing financial risks to its portfolios.

In this context, the ECB’s new monetary policy strategy released last week – the first one in almost two decades – is an unprecedented opportunity to right these wrongs and acknowledge the concerns of over 170,000 citizens that have called on the bank to take concrete climate action.

Indeed, the bank’s strategy sends a very positive signal. It recognises the need to integrate climate considerations into ECB policies and indicates to all financial institutions that climate change can no longer be ignored.

However, so far the package of proposals does little to solve the bank’s climate problem: it does not cut support to companies whose activities are at odds with the EU’s climate objectives, nor does it address the high level of risk associated with the assets it holds, or propose measures that would help the EU achieve its climate goals.

What’s more, the envisioned implementation timeline suggests that these measures will have little if any impact for several years, thus disregarding the urgency of the climate emergency.

We, therefore, call on the ECB to go beyond what has been laid out to date and take full advantage of the opportunity presented by its new strategy to ensure that the bank:

  • Immediately stops all direct or indirect support to companies that develop fossil fuels, notably by excluding these companies from its corporate asset purchases and collateral framework;
  • Aligns its collateral framework with EU climate objectives, as it has committed to do for its corporate asset purchases;
  • Uses all of its operations to contribute – within its mandate – to the EU’s net zero transition, including by conducting specific refinancing operations for the financing of activities with important environmental benefits.
  • Sets high supervisory expectations and uses its full range of regulatory powers to influence banks to reduce their exposure to highly polluting activities like fossil fuel production.

For the ECB, focusing solely on climate risks and delaying the implementation of mitigation measures could impair its ability to fulfil its price stability mission and to ensure financial stability.

It would also bluntly disregard the EU Treaties that require it to support the objectives of the European Union and would leave it open to further legal challenges. A growing number of courts, including the Dutch and Belgian courts and the German Constitutional Court, have already ruled that inadequate action by states on climate change violates obligations to safeguard citizens’ human rights and fundamental freedoms.

The ECB itself is an addressee of the European Charter of Fundamental Rights. It must abide by its legal obligations and take action now, something the new strategy is by no means sufficient to ensure.




  • Marie Toussaint (Greens)
  • Philippe Lamberts (Greens)
  • David Cormand (Greens)
  • Manuel Bompard (GUE)
  • Pierre Larrouturou (S&D)

Civil society and NGOs:

  • Nicolas Dufrêne, Co-director of the Rousseau Institute
  • Johan Frijns, Director of Banktrack
  • Lucie Pinson, Director of Reclaim Finance and Goldman Prize Recipient
  • Leyla Larbi, Senior Campaigner at SumOfUs
  • Alban Grosdidier, Europe Organiser at
  • Jamie Sawyer, Client Earth


  • Tim Jackson, Director of the Center for the Understanding of Sustainable Prosperity and Professor of sustainable development at the University of Surrey
  • Gaël Giraud, senior CNRS researcher in economics and founding director of the Georgetown Environmental Justice Program
  • Jézabel Couppey-Soubeyran, lecturer at the University of Paris 1 Panthéon-Sorbonne and Scientific Advisor to the Veblen Institute
  • Thomas Lagoarde Segot, Professor of economics and finance at Kedge Business School and coordinator of the sustainable finance workstream for the SDSN France
  • Jérôme Deyris, PhD student specialised in financial stability and climate risk and associate researcher at Paris Dauphine’s chair on climate economics and energy and prosperity
  • Christophe Revelli, Professor at Kedge Business School

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