European Central Bank should ‘gradually eliminate’ carbon assets, Lagarde says

(EurActiv, 5 Sep 2019) The European Central Bank should phase out climate-warming investments by preferring green bonds, Christine Lagarde said as she pitched to become the bank’s first female president. EURACTIV’s media partner Climate Home News reports.

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 – the most powerful economic institution in Europe.

Answering questions from members of the EU parliament’s economic and monetary affairs committee, Lagarde suggested the bank should “move towards more green products” and pledged to “continue to look at that and how the ECB can be an actor in this”.

While the amount of carbon assets in the ECB’s portfolio “can’t change overnight”, Lagarde said a “move to a gradual transition to eliminate this type of assets” was “something that needs to be done”.

Cautious not to make “premature commitments”, Lagarde told MEPs that the ECB could not exclusively invest its €2.6 trillion portfolio in green bonds “because there is not enough of a market”. However, she added that if the ECB “signals that it will be increasing and will be intensively looking at [green bond investments] then it’s also something for the market to register”.

In written answers to MEPs’ questions last month, Lagarde said that discussions on how central banks and banking supervisors “can contribute to mitigating climate change is at an early stage but should be seen as a priority”.

Lagarde faces a confirmation vote in parliament next month. Addressing MEPs, she reaffirmed that “climate change and environmental risks are mission-critical” to the ECB and should be “at the core” of any institution’s mission.

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EurActiv, 5 Sep 2019: European Central Bank should ‘gradually eliminate’ carbon assets, Lagarde says