{"id":40223,"date":"2019-09-04T14:42:38","date_gmt":"2019-09-04T13:42:38","guid":{"rendered":"https:\/\/www.climatechangenews.com\/?p=40223"},"modified":"2019-09-10T08:36:42","modified_gmt":"2019-09-10T07:36:42","slug":"european-central-bank-gradually-eliminate-carbon-assets-says-lagarde","status":"publish","type":"post","link":"https:\/\/www.climatechangenews.com\/2019\/09\/04\/european-central-bank-gradually-eliminate-carbon-assets-says-lagarde\/","title":{"rendered":"European Central Bank should &#8216;gradually eliminate&#8217; carbon assets: Lagarde"},"content":{"rendered":"<p><strong>The European Central Bank should phase out climate-warming investments by preferring green bonds, Christine Lagarde said as she pitched to become the bank\u2019s first female president. <\/strong><\/p>\n<p>Lagarde, a veteran French conservative politician and former head of the International Monetary Fund (IMF), is seeking approval from the EU parliament to head the ECB \u2013 the most powerful economic institution in Europe.<\/p>\n<p>Answering questions from members of the EU parliament\u2019s economic and monetary affairs committee, Lagarde suggested the bank should \u201cmove towards more green products\u201d and pledged to \u201ccontinue to look at that and how the ECB can be an actor in this\u201d.<\/p>\n<p>While the amount of carbon assets in the ECB\u2019s portfolio \u201ccan&#8217;t change overnight\u201d, Lagarde said a &#8220;move to a gradual transition to eliminate this type of assets\u201d was &#8220;something that needs to be done\u201d.<\/p>\n<blockquote><p><a href=\"https:\/\/www.climatechangenews.com\/2019\/09\/03\/natural-disaster-spike-drive-2020-insurance-rate-rise\/\"><strong>Natural disaster<\/strong> spike to drive 2020 insurance rate rise<\/a><\/p><\/blockquote>\n<p>Cautious not to make \u201cpremature commitments\u201d, Lagarde told MEPs that the ECB could not exclusively invest its \u20ac2.6 trillion portfolio in green bonds \u201cbecause there is not enough of a market\u201d. However, she added that if the ECB \u201csignals that it will be increasing and will be intensively looking at [green bond investments] then it&#8217;s also something for the market to register\u201d.<\/p>\n<p>In <a href=\"https:\/\/www.europarl.europa.eu\/meetdocs\/2014_2019\/plmrep\/COMMITTEES\/ECON\/PR\/2019\/09-04\/1187645EN.pdf\">written answers to MEPs\u2019 questions<\/a> last month, Lagarde said that discussions on how central banks and banking supervisors \u201ccan contribute to mitigating climate change is at an early stage but should be seen as a priority\u201d.<\/p>\n<p>Lagarde faces a confirmation vote in parliament next month. Addressing MEPs, she reaffirmed that \u201cclimate change and environmental risks are mission-critical\u201d to the ECB and should be \u201cat the core\u201d of any institution&#8217;s mission.<\/p>\n<p>As head of the IMF, Lagarde campaigned for greater disclosure of the risk climate change poses to the financial system. Under her leadership, the fund was also highly critical of fossil fuel subsidies.<\/p>\n<blockquote><p><strong>Climate Home News needs your help\u2026<\/strong>\u00a0We\u2019re an independent news outlet dedicated to the most important global stories. If you can spare even a few dollars each month, it would make a huge difference to us.\u00a0<a href=\"https:\/\/www.patreon.com\/climatehomenews\">Our Patreon account<\/a> is a safe and easy way to support our work.<\/p><\/blockquote>\n<p>ECB investment decisions are governed by the long-standing principle of market-neutrality, which proscribes the bank from preferring one sector over another. The former French finance minister suggested a classification system currently <a href=\"https:\/\/ec.europa.eu\/info\/publications\/sustainable-finance-teg-taxonomy_en\">being developed by the EU parliament<\/a> to define what constitutes a green asset, would need to be \u201csuperimposed\u201d with market-neutrality.<strong><br \/>\n<\/strong><\/p>\n<p>For Stanislas Jourdan, head of Positive Money Europe, a campaign group that has called for the ECB to do more to promote green finance, market-neutrality is &#8220;inconsistent with the ECB&#8217;s strategy to shift market participants&#8217; behaviour on sustainability&#8221;. He believed moving beyond the market-neutrality approach was &#8220;the cornerstone&#8221; for greening the bank&#8217;s investments.<\/p>\n<p>\u201cIt was positively surprising that she would be ready to move on this,\u201d he said. \u201cI think she completely confirmed that she is ready to make headway in the right direction.\u201d<\/p>\n<p>Pierre Monnin, a fellow at the Council on Economic Policy specialising in the environmental and social effects of monetary policy, told Climate Home News Lagarde\u2019s answers to climate questions were \u201cdefinitely more progressive than the responses that [outgoing ECB president Mario] Draghi use to give on the same issues\u201d.<\/p>\n<blockquote><p><strong>Climate news straight to your inbox?<\/strong>\u00a0<a href=\"https:\/\/www.climatechangenews.com\/newsletter-sign-up\/\">Sign up here<\/a><\/p><\/blockquote>\n<p>Monnin welcomed Lagarde\u2019s indications that she is ready to consider options to decarbonise the ECB\u2019s portfolio. \u201cThis could already have an impact on financial markets,\u201d he said.<\/p>\n<p>The private sector is shifting away from products with high climate risks, with investors concerned that the transition of the global economy towards greener markets could leave assets stranded or reduced in value.<\/p>\n<p>A report published on Wednesday by S&amp;P Global Ratings showed the responsible loans market grew dramatically over the last year, jumping from $32 billion in 2018 to a value of $111.5bn as of July 2019.<\/p>\n<p>Lagarde&#8217;s comments come after campaigners published <a href=\"https:\/\/report.gndforeurope.com\/cms\/wp-content\/uploads\/2019\/09\/GNDE-A-Blueprint-for-Europes-Just-Transition.pdf\">a blueprint for a Green New Deal for Europe<\/a> this week, recommending that the union finance its green transition through bonds issued by the European Investment Bank and by mobilising public banks to issue green bonds.<\/p>\n<p>European Commission president-elect Ursula von der Leyen, who is due to take office on 1 November, previously <a href=\"https:\/\/www.climatechangenews.com\/2019\/07\/16\/climate-plays-decisive-role-ursula-von-der-leyen-annointed-eu-chief\/\">pledged to develop a \u201cgreen deal\u201d for Europe<\/a> in her first 100 days in office. Although details of her proposal remain unclear, Lagarde welcomed the move.<\/p>\n","protected":false},"excerpt":{"rendered":"Nominee to lead the bank told MEPs it could adopt new measures to prefer green investments if she is confirmed","protected":false},"author":39,"featured_media":40225,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[607,3863,3015,82,3650,3859],"tags":[],"coauthors":[4267],"class_list":["post-40223","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-carbon-markets","category-finance","category-divestment","category-eu","category-green-bonds","category-world","type-news"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>European Central Bank should &#039;gradually eliminate&#039; carbon assets: Lagarde<\/title>\n<meta name=\"description\" content=\"Nominee to lead the bank told MEPs it could adopt new measures to prefer green investments if she is confirmed\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.climatechangenews.com\/2019\/09\/04\/european-central-bank-gradually-eliminate-carbon-assets-says-lagarde\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"European Central Bank should &#039;gradually eliminate&#039; 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