More than 40 countries have adopted carbon pricing policies

Carbon intensity of (estimated) ECB purchases

A recent event co-organized by De Nederlandsche Bank took place at the end of November to discuss “Central Banking and Green Finance”, gathering many researchers from academia, central banks, and other institutions. This took place in a context in which we see growing awareness of the need for “clear strategic policy signals and frameworks” (G20 2016 meeting in China), coupled with a strengthening perception that central banks should probably contribute to this momentum. Among the event’s key takeaways, you will find noteworthy research papers and interesting data as in the above graph, suggesting there is a strong potential to green the ECB’s asset purchases and thus support green finance. Based on estimates, the BoE presents a similarly high exposure of asset purchases to carbon-intensive sectors compared with the weight of these sectors in gross value added. A shift in central banks practices would be very consistent with current trends and, thus, appears to become a real possibility to look at. Mark Carney himself helped moving the financial sector following his famous speech on Breaking the tragedy of the horizon 2 years ago, and the 2012 Treaty of the Functioning of the EU states clearly that the ECB shall support the achievement of the Union’s objectives including “social progress, and a high level of protection and improvement of the quality of the environment” (Article 3).

GVA: gross value added

Notes: Size of the bubble indicates relative contribution to emissions in euro-area countries.

Sources: ECB (ISINs, as of February 2017), Bloomberg (NACE categories, 2017), Eurostat (emissions and GVA data, as of 2013), and authors’ calculations.


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