European Central Bank president Christine Lagarde told lawmakers Monday she was keen to weave thinking on climate change into the institution’s work, but stressed its main task remains price stability.
“I am fundamentally convinced that fighting climate change has to be central and high priority,” Lagarde told European Parliament lawmakers in Brussels, although “the ECB’s mandate is not climate change”.
That “doesn’t stop us from having to look into our operations and identifying how we can be effective,” she added.
Lagarde said climate change effects should be built into the ECB’s economic models, into its judgements of the risks faced by major banks it supervises, into investment decisions under its “quantitative easing” (QE) bond-buying programme and in management of its pension fund.
As well as multiple questions for Lagarde from MEPs during her two-hour question and answer session, academics and civil society groups like Greenpeace or charity Caritas France have pressured the ECB to act on climate.
“The most powerful financial institution in Europe cannot just sit passively as we witness a growing environmental crisis,” they wrote in an open letter last week.
Lagarde took office soon after the ECB’s governing council agreed to restart mass purchases of government and corporate bonds from November.
Although QE is designed to boost growth and raise inflation towards its just-below-two-percent target, critics argue the ECB could also channel its private sector bond purchases away from fossil fuels and other “brown” sectors harmful to the environment.
But Lagarde’s previous gestures towards climate action were met with stern warnings from the head of Germany’s powerful Bundesbank (central bank) Jens Weidmann.
Her stance “does not turn us into having as mandate number one the fight against climate change,” Lagarde said Monday, adding that she could “agree with Mr Weidmann”.
“This is a matter where clearly governments, policymakers have the key role to play,” she said.