ECB to publish first detailed carbon footprint

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(C) Reuters. FILE PHOTO: Steam rises from Neurath lignite power plant, in Grevenbroich, Germany, January 16, 2020. REUTERS/Wolfgang Rattay
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By Marc Jones

LONDON (Reuters) -The European Central Bank and euro zone national central banks will publish their first detailed carbon footprints in the coming days, showing the environmental impact of years of crisis-fighting.

The ECB and the 20 countries that use the single European currency have spent trillions of euros during years of rolling crises buying bonds, including those of companies that are heavy polluters.

“We will be disclosing the (ECB and Eurosystem) carbon footprint,” Clara Raposo, a vice governor at Portugal’s national central bank, told a sustainable policy conference hosted by the Official Monetary and Financial Institutions Forum (OMFIF).

Carbon footprints measure the amount of carbon dioxide released into the atmosphere as a result of everyday activities.

For the ECB and euro zone national central banks, that includes their asset-buying programmes, as well as areas such as staff pensions.

The latest ECB figures show it owns corporate bonds worth just over 340 billion euros that it bought under its corporate sector purchase programme (CSPP), plus another 45 billion euros of bonds purchased with its COVID-era Pandemic Emergency Purchase Programme (PEPP).

While she wasn’t “particularly ecstatic” about the size of the carbon footprints, Raposo said it was an important process that provided a benchmark to work from.

The ECB is trying to take a more active role in fighting climate change.

It runs climate stress tests on the euro zone’s commercial banks and has been increasing the penalties – or haircuts, in banking jargon – charged on polluting companies’ bonds used as collateral to get ECB funding.

Earlier this year, sustainable finance thinktank Anthropocene Fixed Income Institute (AFII) estimated the ECB could cut the carbon footprint of its corporate bond holdings by 87% if it sold 48 billion euros of debt from 25 top polluters.

These included oil and gas companies such as Shell (LON:RDSa), TotalEnergies, Repsol (OTC:REPYY) and BP (NYSE:BP).

Leading ECB policymaker Isabel Schnabel has said bank needs to consider shifting its portfolios towards greener companies’ debt.