AP

Europe’s central bank to use climate scores as it buys bonds

Sep 19, 2022, 10:01 AM | Updated: 10:34 am

FRANKFURT, Germany (AP) — The European Central Bank said Monday that it will give corporations climate scores before it buys their bonds and intends to prioritize those doing more to reveal and reduce greenhouse gas emissions, filling in details of its efforts to help Europe meet its environmental goals.

The Frankfurt, Germany-based central bank for the 19 countries that use the euro said it was taking the step to support the European Union’s climate goals. The companies’ scores would measure progress in reducing past emissions, plans to reduce them in the future, and completeness of reporting the amount of greenhouse gases they are emitting.

The ECB bought corporate bonds as part of its past economic stimulus efforts to lower longer-term interest rates. Those programs have ended, with the bank now reinvesting the proceeds of maturing bonds and using the climate scores in deciding on bond holdings. It says it will buy more from companies with better scores and in theory support their ability to borrow at lower rates.

The bank’s primary mandate is not the environment but controlling inflation in the eurozone, a task that it is trying to achieve by raising interest rates. However, it can pursue other goals — such as supporting the general economic policies of the EU, which include fighting climate change — if that doesn’t interfere with fighting inflation.

The bank specified that it would apply the climate criteria only to the proportion of bonds in its portfolio, not to the volume of its purchases, which would continue to be determined only by monetary policy considerations.

Both the ECB and the Bank of England have taken climate change into account more than the U.S. Federal Reserve, which has made modest steps to incorporate climate concerns into its regulatory framework. The U.S. central bank, which is expected to raise its key rate by a substantial three-quarters of a point for the third consecutive time Wednesday, faces criticism from congressional Republicans who say the issue is not part of the Fed’s purview.

But some environmentalists say central banks aren’t going far enough. Reclaim Finance says the ECB’s new method of weighting purchases means the worst polluters will still be accepted.

“The ECB’s plan means continued support to fossil fuel firms that are doing the most damage to both the environment and inflation,” said Paul Schreiber of the Paris-based climate advocacy organization. “Instead of showing that it is up to face the current twin climate and cost of living crises, the central bank keeps on contributing to the EU’s fossil fuel dependency and fails to support its clean energy transition.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Rudy Giuliani...

Associated Press

Rudy Giuliani is the final defendant to serve indictment in Arizona fake elector case

Rudy Giuliani has been served an indictment in Arizona's fake elector case for his role in an attempt to overturn the 2020 election.

18 hours ago

Houston storms cause widespread damage on Friday...

Associated Press

Some in Houston facing no power for weeks after storms cause widespread damage, killing at least 4

Houston storms cause widespread damage on Friday, May 17. Thunderstorms hit the southeastern part of Texas, killing at least four people.

2 days ago

Man gets 30 years in prison for attacking ex-Speaker Nancy Pelosi’s husband with a hammer...

Associated Press

Man gets 30 years in prison for attacking ex-Speaker Nancy Pelosi’s husband with a hammer

A man has been sentenced to 30 years in prison for attacking the husband of then-House Speaker Nancy Pelosi with a hammer.

2 days ago

audio from President Joe Biden’s interview about classified documents blocked...

Associated Press

GOP advances Garland contempt charges after White House exerts executive privilege over Biden audio

The move to release audio from President Joe Biden’s interview about classified documents was blocked on Thursday by the White House.

3 days ago

Asylum processing for new migrants: Changes could come soon...

Associated Press

The Biden administration is planning more changes to quicken asylum processing for new migrants

The Biden administration is planning to quicken the asylum processing for new migrants as an interim step rather than an executive order.

4 days ago

Record-setting rally for U.S. stocks reflects inflation slowing down...

Associated Press

Stock market today: Asian shares advance after another round of Wall St records

The S&P 500 jumped 1.2% to top its prior high set a month and a half ago. This move reflects a record-setting rally for U.S. stocks.

4 days ago

Sponsored Articles

...

COLLINS COMFORT MASTERS

Here are 5 things Arizona residents need to know about their HVAC system

It's warming back up in the Valley, which means it's time to think about your air conditioning system's preparedness for summer.

...

DISC Desert Institute for Spine Care

Sciatica pain is treatable but surgery may be required

Sciatica pain is one of the most common ailments a person can face, and if not taken seriously, it could become one of the most harmful.

...

Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

Europe’s central bank to use climate scores as it buys bonds