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Fossil finance: Reactions as European Central Bank centres climate on its policy strategy

The European Central Bank (ECB) on Thursday, July 8, 2021 announced that it would incorporate climate in the way the bank assesses risk and sets monetary policy across the Eurozone.

Christine Lagarde
Christine Lagarde, President of the European Central Bank (ECB)

Observers believe that, as one of the world’s most important central banks, the precedent-setting move sends a strong message to other banks and financial institutions around the world to indicate that the era of fossil finance is coming to an end.

Activists are said to have been targeting the European Central Bank and its president, Christine Lagarde, for 18 months with protests, petitions, open letters to decision-makers, and online tactics demanding that the bank drops its own fossil fuel assets, and sets rules for private banks to cut the flow of finance to fossil fuels.

Thursday’s decision is said to reflect the pressure that people power has brought to bear on governors at the bank.

However, says 350.org, an international environmental organisation addressing the climate crisis, this announcement could be stronger. The conservative International Energy Agency is reportedly calling for an end to new fossil fuel investments but this new climate plan from the European Central Bank could be slow to implement and invites a lot of technical discussion that might create loopholes for some dirty investments.

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Julia Krzyszkowska, Europe Campaigner at 350.org, said: “Today’s news is a victory for the climate justice movement, and the 165,000 people who signed a petition calling for an end to fossil finance and campaigned for over a year to put the climate crisis at the top of the Bank’s agenda. The ECB is sending a clear signal: the era of fossil fuel finance is rapidly coming to an end. Now, it’s time for private banks and investors to urgently catch up, and cut their ties with the toxic coal, oil and gas industry.”

Rika von Gierke activist at the Koala Kollektiv, said: “We are happy that months of protesting against fossil finance are paying off but we will keep watching the ECB’s actions. Too often we have heard pretty words that mean nothing but greenwash. We will continue to protest until the governing council sets strong and clear rules to drop fossil fuel assets and properly regulates the financial sector against climate chaos.”

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Ilan Zugman, Director to Latin America at 350.org: “We expect the European Central Bank to do more to stop climate colonialism being practiced by European private banks, such as HSBC, which finances fracking activities in the Vaca Muerta shale basin, in Argentina. If there is a moratorium on fracking in England, France and other European countries, due to environmental risks and harm to local communities, then why is it fine to profit from in Latin America?”

Glen Tyler-Davies, South African Team Leader, 350Africa.org: “The South African Reserve Bank and other South African financial institutions, notably the Development Bank of Southern Africa and Industrial Development Corporation need to take note of these global financial currents – they seem to be swimming against them by continuing to fund fossil fuel projects. Funding they receive from the European Investment Bank could well be influenced by this decision, and they have a small window of opportunity to get out ahead of this by updating their own policies.”

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Tracey Lewis, Senior Finance Policy Analyst with 350.org US: “This commitment from the European Central Bank makes it even more shocking how short Jerome Powell is falling as Federal Reserve Chair. While the ECB begins to act on fossil fuels as a direct risk to our climate and financial systems, the Fed dangerously abdicates responsibility. We the people are rising up to demand President Biden, Secretary Yellen, and the Senate appoint a real climate leader to champion the Fed as the Peoples’ Bank.”

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