ECB tilts toward climate, but investors can go further – AllianceBernstein

AllianceBernstein think investors need a holistic understanding of climate issues to address the causes and effects of climate change.

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The European Central Bank (ECB) is set to tilt its monetary policy strategy towards corporate bond issuers with 'better climate performance'. That’s a laudable but challenging goal to implement. While simple decision rules may seem useful, AllianceBernstein think investors need a holistic understanding of climate issues to address the causes and effects of climate change.

In July, the ECB announced an official start date of October 2022 for building climate change into its monetary policy operations. The climate policy tilt will include not only the ECB’s corporate bond-buying programs but also the bank’s disclosure policies, risk assessment and collateral framework. Under the plan, the share of assets on the Eurosystem’s balance sheet issued by companies with a better climate performance will be increased compared with that by companies with a poorer climate performance. That sounds straightforward, but there are formidable practical difficulties around this plan.

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