President Mario Draghi of the European Central Bank (ECB) has taken an exciting step in suggesting that the ECB will look into conducting a climate assessment of its quantitative easing programme.

After a letter drawn up by the New Economics Foundation (NEF) and Positive Money EU ( signed by more than 50 NGOs), which called on central banks to account for climate risks in their analytical frameworks and operations was cited by MEPs yesterday, President Draghi stated:

To my understanding we don’t have analysis of our programme, or climate change considerations in our programme but I can certainly say we will look into this and see what’s the effect.”

Reacting to yesterday’s statements, Frank Van Lerven, author of the letter and NEF Economist, said: 

NEF welcomes President Draghi’s commitment to examining the climate impact of the ECB’s colossal quantitative easing programme.

The ECB holds nearly half a trillion euros worth of private sector financial assets on its balance sheet that are heavily skewed towards carbon-intensive activities. ECB policy inadvertently subsidises carbon intensive activities and risks reinforcing the current​‘carbon lock-in’ of energy systems centred upon fossil fuels, endangering financial stability and undermining the Paris Climate Agreement.

A climate assessment of its quantitative easing programme could represent a fundamental turning point, where monetary policy is better aligned with the financial stability risks posed by climate change and the urgent need for a sustainable low carbon transition.”