Climate: central banks must take part in the battle, argues Christine Lagarde

ECB President Christine Lagarde after the first meeting of the Governing Council since the start of the conflict in Ukraine on March 10, 2022 in Frankfurt (POOL/AFP/Daniel ROLAND)

Central banks must get involved in the battle against climate change, European Central Bank (ECB) President Christine Lagarde argued on Friday.

“Central banks are not driving the bus in the fight against climate change,” said the president of the institution, believing that they should however “be on the bus”.

“They must see how climate change affects their strategy, instruments, policies,” she argued.

ECB President Christine Lagarde sees climate change as one of the major risks for the economy and the banking sector in the coming years.

She had, since her arrival at the head of the institution at the end of 2019, wanted climate protection to be a “founding element” of the ECB’s action.

The ECB thus decided this summer, during a review of its strategy, to integrate new criteria relating to the climate into its policy, in particular concerning its asset purchases. And it recently launched its first test of resistance to climate shocks with major banks in the euro zone.

“Climate change is a very important factor in what we study, in the way we make our decisions, frame our tools and our investment policies,” said Ms. Lagarde.

“However, the subject is above all a matter for governments”, she added, believing in particular that “a tax adjustment at the borders is the way to go”.

The European Commission had proposed in July to establish an EU “carbon border adjustment mechanism”, to tax certain imports from 2023 (steel, aluminium, cement, fertilizers, electricity) at the price of the European carbon market, in depending on the emissions related to their production.

EU member states endorsed their roadmap for this project last month, but without deciding on certain key terms that still divide the 27 and will be debated later.

© 2022 AFP

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