ECB: Eat your greens

Sustainable bonds could soon become a hot topic for the European Central Bank and its Corporate Sector Purchasing Programme, CSPP. Sustainability is not explicitly mentioned in the ECB’s mandate, but you just have to look at Christine Lagarde’s nomination speech, which strongly underlined climate change issues, the EU Commission’s work on green bond taxonomy, and EU President Ursula von der Leyen’s Green Deal for Europe to realise its increasing importance.

In this report, we outline four possible scenarios that could be adopted should the ECB assume a more sustainable policy and analyse their implications and limits.

1: The ECB decides to buy onlygreen bonds

2: The ECB decides to increase its sustainability with investments based on assinged ESG or Environmental, Social and Governance scores.

3: The ECB decides to sell non-green/low ESG score names or sectors

4: The ECB no longer invests in carbon intensive corporates