A roadmap towards greening the European Central Bank

For free

Mitigating climate change and environmental degradation stands as one of the most pressing societal challenges for the foreseeable future. The far-reaching implications of climate change hold significant consequences for the operations of the European Central Bank (ECB). Notably, the volatile nature of fossil fuel prices, a key driver of climate change, poses a direct threat to the ECB’s core mandate of achieving price stability. Rising global temperatures, coupled with the increasing frequency and intensity of extreme weather events, contribute to inflationary pressures, which are expected to amplify as climate change intensifies. Additionally, climate change introduces systemic risks to financial stability, which will only worsen if left unaddressed. It is, therefore, entirely justified, and necessary, within the framework of its primary mandate, for the ECB to take ambitious action to mitigate climate change. Furthermore, the ECB is obligated by its secondary mandate to support the European Union’s efforts to accelerate the green transition. The ECB must adopt a proactive environmental stance. This entails that the ECB takes into account the broader environmental consequences of its policies. Such an approach would serve as a more fitting guiding principle, given the magnitude of the challenges that climate change entails.

Read the blog post by Positive Money Europe.

Product details
Date of Publication
December 2023
Heinrich-Böll-Stiftung European Union & Positive Money Europe
Number of Pages
Language of publication
ISBN 978-9-46494421-1
Table of contents

1. Introduction 12
2. The green transition and the ECB’s mandate 12
2.1. Price stability 12
2.2. Financial stability 14
2.3. The secondary mandate 15
3. The ECB’s policy approach thus far 16
3.1. The ECB’s climate action roadmap and its risk-based foundation 16
3.2. Issues of the ECB’s current monetary policy stance 18
4. Greening the ECB 19
4.1. Monetary policy operations 19
4.2. Macroprudential policies 22
4.3. Monetary policy and fiscal policy coordination 23
5. Conclusions 27
References 28