ECB to buy fewer bonds from polluting companies
ECB purchases of corporate bonds will be geared towards companies that emit fewer carbon emissions, measuring their performance, goals, and climate disclosures.
Last year, the ECB introduced a number of measures to counter climate change, including bank supervision and monetary policy, and it is now focusing on companies that perform well on climate change.
“One goal is to reduce the Eurosystem’s exposure to climate-related financial risk,” the ECB said in a statement. “Furthermore, these measures support the green transition of the economy in line with the EU’s climate neutrality objectives.”
The European Central Bank will begin using a climate score it created next month when deciding how much debt to purchase with maturing bonds.
A low climate score will not prevent the bank from selling bonds or excluding issuers, and the bank will not disclose each company’s climate score.
Activist group Reclaim Finance, which campaigns to cut finance to carbon-heavy industries, said the ECB was not going far enough.
“The ECB’s plan means continued support for fossil fuel firms that are doing the most damage to both the environment and inflation,” Paul Schreiber, a campaigner at the group, said.
By comparing past emissions between companies, the ECB will examine how they compare to their peers. Furthermore, it will look at the quality of climate disclosures made by issuers and their objectives to reduce greenhouse gas emissions.
“The (ECB) will use its climate score to adjust its bids in the primary market to favour issuers with better climate performance and to impose maturity limits on bonds from lower-scoring issuers,” the ECB added.
Source: Reuters
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