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Civil society groups call on ECB to be bolder on climate commitments

ECB should use monetary policy to fight the climate and nature crisis, say NGOs, ahead of the ECB’s Ireland retreat

The European Central Bank (ECB) is being urged to better use monetary policy to tackle the climate and nature crises, in a joint statement released by civil society groups ahead of the bank’s strategic retreat in Ireland (21 – 22 May). Signed by organisations including Positive Money, NEF, Reclaim Finance and WWF, the statement calls for greener monetary policies as part of the ECB’s climate action plan (1).

As the ECB prepares for its first quadrennial strategy review since 2021, the organisations have published a joint statement today entitled, Monetary policy for a stable and prosperous EU: how the ECB should address the climate and nature crisis. In the last strategy review, the ECB adopted a climate action plan. The coalition statement calls for continued strong moves towards greener monetary policies and an efficient and systematic way of meaningfully engaging with civil society.

While the ECB has made strides in acknowledging its role in climate change mitigation, it falls short in taking decisive and impactful actions. The recent interest rate hikes, which have hit the very investments in clean energy and energy efficiency needed to protect ourselves against future energy price shocks, underscore this misalignment’ says Uuriintuya Batsaikhan at Positive Money. The upcoming strategy review is a critical moment to introduce monetary policies that are up to the immense challenge we have at hand. The ECB’s engagement with civil society will be key in shaping an effective monetary policy”.

The NGOs argue that the ECB cannot afford to neglect climate and nature. There are clear recommendations in the joint document. Starting with the necessity for the ECB to adopt precautionary measures minimising environmentally harmful activities, aligning monetary policies with the EU’s climate mitigation efforts as part of its core mandate and to develop a strategy to align its asset portfolio with the goals of the Paris Agreement.

The European Central Bank’s monetary policy review provides a timely opportunity to update its climate roadmap and recognise the current challenges that we face. The inflation we experienced, which was partly driven by gas prices (2), should serve as proof that, now more than ever, the ECB needs to halt any support to environmentally harmful activities and start actively supporting the necessary transition” says Clarisse Murphy, central banks campaigner at Reclaim Finance.

The NGOs advocate for a transformative approach to the ECB’s collateral framework, taking into account climate and nature-related considerations. The proposal also includes using green Targeted Longer-Term Refinancing Operations (gTLTROs) to lower financial barriers for sustainable investments that are crucial for long-term price stability and the EU’s transition goals (3).

Beyond climate considerations, the NGOs also emphasise social equity saying, The ECB should transparently quantify and review the distributive effects of its monetary policy decisions.”

The implementation of new fiscal rules has sparked worries about a return to austerity measures in many EU countries. The joint statement emphasises the need for better coordination between governments and central banks to fight inflation and environmental challenges.

The coalition says that the upcoming strategy discussions represent a unique opportunity for the ECB to demonstrate global leadership by embedding sustainability at the heart of European monetary policy whilst also providing the perfect opportunity to continue engaging with civil society.

Dr Lydia Prieg, head of economics at the New Economics Foundation, says: The ECB has made important climate progress since 2020, but is still exhibiting serious shortcomings – and in the last four years, the impacts of the climate crisis have become increasingly serious. Without an acceleration of action, the human and economic toll of runaway climate change will be huge. If we want a stable and resilient European economy, we need the ECB to take seriously the risks of the climate and nature crises, and embrace the opportunities of the green transition.”


The New Economics Foundation is a charitable think tank who are wholly independent of political parties and committed to being transparent about how it is funded.

(1) The joint statement can be found here

(2) The impact of gas prices on inflation

(3) ECB stress tests highlighting the need for an accelerated transition

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