EU Hypocrisy: ECB systematically investing billions in fossil fuels

Whilst institutions like the European Investment Bank and the European Bank of Reconstruction and Development are obliged to consider climate change in their investments, the European Central Bank is investing billions of Euros in fossil fuels, sparking controversy among the contradictions surrounding universal EU principles and priorities.

---

It was almost on cue. One day after the EU unveiled their modern, glamorous and ridiculously expensive new Headquarters in Brussels, heaping self-praise and highlighting their values and their principles, 320km away the shadows of hypocrisy were quick to mar the suggested impeccability of the Union. Whilst other institutions like the EIB and the EBRD are taking significant steps to maintain their pledge to invest in projects with an eye to fight against climate change, a recent report by the Corporate Europe Observatory campaign group has indicated that the ECB´s quantitative easing programme is systematically investing billions of Euros in the oil, gas and automobile industries.

Whilst there is awareness that the economic crisis affects all sorts of industries, including the oil and gas industry, there is a sense of hypocrisy and duplicity from an institution representing the EU.

The Frankfurt based bank purchased €46bn of corporate bonds over the past six months in a bid to boost alarming euro-zone growth rates, with a view to investing a further €125bn over the next ten months. An analysis of the bank’s international security identification numbers (ISINs) by the Corporate Europe Observatory showed that the ECB has made 11 separate bonds purchases from Shell, 16 from Italian company Eni, seven from Total and twelve between Repsol and OMV. In countries like Spain and Italy, more than half the security transactions bought by the bank with QE money were focused on gas utilities.

The ECB has been quick to defend that their modus operandi and reasoning is orientated towards monetary policy objectives and that unlike other EU institutions, they are not obliged to consider the effects of their investments on climate change.

As a matter of fact ECB sources have insisted that they will not alter their EU policies and corporate purchasing programmes, orchestrated independently by the bank and carried out in line with national priorities, for example: the automobile industry (Daimler and BMW and VW) in the Bundesbank.

The ECB have prepared an excuse saying it has done nothing wrong in comparison to other financial entities, but there is an undeniable hypocrisy in the statement. The ECB, as a representative of the EU, should at least be aligned with Europe´s industrial strategy and energy policy, including the EU’s pledge to cut its carbon emissions by 80% by mid-century, create a net zero carbon economy by the second half of the century, and other agreements accorded in the COP21 Paris summit. By investing in fossil fuels, the ECB is actively undermining the EU’s policies and alleged priorities towards clean energy. An institution as representative and powerful as the ECB should be aware of this, and when creating investments and financial policies that stand against and weaken long-term policies towards sustainable development and climate change, the ECB should ask itself where its priorities lie.

At a time when employment and environmental issues are protagonists and screaming for assistance, it is no surprise to see that a major bank has opted to help out the big companies, including dodgy car makers and the oil and gas industry. The fact that this public money being carelessly and thrown comes from a bank that represents Europe is nothing short of a mayor, albeit unsurprising, disappointment.