The President of the European Central Bank (ECB) Christine Lagarde on Wednesday criticized the lack of funding dedicated to environmental projects, yet urgent to support under the Paris Agreement, and invited governments to play their role.
“There is not enough directed funding in the green sector,” Lagarde said at a meeting of the UN Finance Initiative for the Environment (UNEP FI).
Investments of this nature only amounted to “100 billion euros last year”, while 290 billion euros would be needed each year, in Europe alone, “to make the Paris Agreement a reality (de 2017 on the climate) and even do better if we can, ”said the Frenchwoman.
“We therefore lack two thirds of what is absolutely necessary,” she said.
Europe “is not doing a bad job in this respect”, she qualified, but “greater involvement” is desirable to correct “market failures in the field of green finance”.
“Is it up to a central bank to do this? No. But lawmakers, regulators, have a role to play,” said Lagarde.
In this regard, she welcomed the efforts of the European Parliament, which in July proposed to establish a nomenclature to identify the projects that could receive a “green” label. This initiative still faces political obstacles.
Investors sometimes struggle to discern what is good for the environment when raising money in the market.
The ECB, which has been buying billions of euros in bonds on the market to support the economy since 2015, also wants to participate in this reflection: the principle of “neutrality”, which consists in not giving priority to any sector over a other in the management of the bank’s assets, must be questioned, she said.
The boss of the monetary institution wants climate change to have a big place in the future monetary policy strategy of the ECB, a project launched at the beginning of the year and which was delayed due to the pandemic.
In September, the institution decided to accept from January a new category of durable bonds as collateral for loans granted to banks, illustrating its desire to green its monetary policy.