Research indicates that the European Central Bank could significantly reduce the carbon footprint of its portfolio of corporate bonds by selling just 50 billion euros ($54.30 billion) of debt from polluting corporations, but economists warn that this could lead to significant market distortions.
The ECB’s environmental goals have come under the spotlight after board member Isabel Schnabel warned this week that the bank has to intensify its efforts to reduce its environmental impact.
Some of the hurdles met by ECB are:
- Bond sales would penalise corporations with high emissions.
- Awarding firms with ratings for their climate reporting and goals
- Opting to purchase bonds from greener issuers
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