The Governing Council of the European Central Bank (ECB) on Monday announced a major policy shift in the bank’s operations. The Bank’s indicated on its website that climate change considerations has now been included in the Eurosystem’s monetary policy framework.
According to ECB President Christine Lagarde, the Bank “decided to adjust corporate bond holdings in the Eurosystem’s monetary policy portfolios and its collateral framework, to introduce climate-related disclosure requirements and enhance its risk management practices”.
The bank said the new measures were designed in full accordance with the Eurosystem’s primary objective of maintaining price stability. Specifically, the new policy sought to achieve two objectives. Primarily, it was to incorporate climate-related financial risk in the Eurosystem balance sheet; and the secondary objective was to support the green transition of the economy in line with the EU’s climate neutrality objectives.
The Bank disclosed that its new measures “provide incentives to companies and financial institutions to be more transparent about their carbon emissions and to reduce them.
“With these decisions, we are turning our commitment to fighting climate change into real action”, said President Lagarde.
The initiative by ECB is commendable and worthy of being emulated by Central Banks in Africa. We are however glad to note that commercial banks like Sterling Bank and Providus Bank have taken bold and remarkable operational step towards climate change mitigation in Nigeria.
We urge the Central Bank of Nigeria to take the lead by effectively promoting its climate change policies, if indeed it has robust ones as we expect, and to incentifies commercial banks to toe the same line. Every sector of the economy has a role to play in ensuring that Nigeria, nay Africa, achieve the global target on carbon emissions set by the 2016 Paris Agreement.