Lagarde Pushes ECB To Shun Fossil Fuel Bonds As Central Banks Embrace "Green" Future

Climate activists led by Greta Thunberg have fostered the specious claim that solving climate change is an essential part of the battle to end "inequality" for good (even though the two phenomena have little to do with one another). And now, with central banks around the world signing up to enforce the Paris accords, ECB chief Christine Lagarde is reportedly planning on striking a blow against the fossil fuel industry by forcing the ECB to slash purchases of bonds issued by energy giants like Exxon.

Christine Lagarde is expected to make the European Central Bank a pioneer in fighting climate change by slashing its purchases of bonds issued by fossil fuel companies and other heavy carbon emitters, according to a Financial Times poll of economists. The ECB president has pledged to make tackling climate change a major part of the central bank’s strategic review of its remit and tools, which is due to be completed by the second half of 2021.

Two-thirds of the 33 economists polled by the FT believe the review will result in the ECB deciding to break with its long-held principle of “market neutrality”, which requires it to buy bonds in proportion to the overall market. Environmental campaigners have criticised the ECB’s €248bn corporate bond purchases for reinforcing the market’s bias in favour of heavy carbon emitters such as oil and gas companies, utilities and airlines because these sectors issue more bonds than most others.

One economist who spoke to the FT about Lagarde's plans defended them by arguing that "market neutrality" was always a facade...

"Market neutrality was always a pretence because it still involved choices of what to buy and what not to buy - so why not make those choices consistent with [policy] preferences?" said Paul Diggle, senior economist at Aberdeen Standard Investments.

...and that choosing which companies to support, and which not to support, is actually consistent with the central bank's price stability mandate.

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