The European Central Bank today unveiled plans to make its monetary policy greener, but it has faced criticism from environmental groups urging the Frankfurt-based institution to go further.
In a statement, the ECB saidtheECBGoverning Council's measures "are designed to better consider climate-related financial risks" and "support the green transition of the economy in line with the EU's climate neutrality goals".
Under the new plan,the ECBaims to "gradually decarbonize corporate bond holdings" starting in October 2022, shifting it to issuers with better climate performance.
This will be measured by indicators such as lower greenhouse gas emissions, more ambitious carbon reduction targets and better climate-related disclosures, the bank said.
The ECB's asset-purchase portfolio, worth about 350 billion euros (RM1.6 trillion), is now mostly skewed towards large polluters.
The central bank aims to "shift these assets to climate-performing issuers" as it reinvests around 30 billion euros a year.
The aim is to "provide companies with more incentives to reduce emissions," Isabel Schnabel, a member of the ECB's executive board, told a news conference.
However, "no company is completely excluded from the portfolio," she added.
The ECB has been repeatedly criticized by environmentalists for the disproportionate role of energy companies such as oil majors Shell and TotalEnergies in its portfolio.
Mauricio Vargas, chief economic campaigner at Greenpeace, told AFP: "The ECB must immediately rule out investments in fossil fuel companies that plan to undermine the 1.5-degree target (climate deal) reached in Paris."
Stanislas Jourdan, head of lobby group Positive Money Europe, said the "background of fossil fuel-driven inflation" also called for "bolder measures" from the ECB.
Inflation in the euro zone climbed to 8.6% in June as energy prices surged following the outbreak of the Ukraine war.
Positive Money said more investment in renewable energy would "contribute to the ECB's price stabilization mandate" to achieve its 2% inflation target.
The group said the central bank should set "green" rates for bank loans to boost investment in climate projects.
