Paris, October 28th 2021 – The European Central Bank’s (ECB) covid-related asset purchasing spree significantly expanded support for European oil and gas majors, according to shocking new research from Reclaim Finance. Between April 2020 and September 2021, just as it was developing and lauding its first climate roadmap (1), the ECB acquired 15 bonds in five oil & gas giants – Shell, TotalEnergies, Eni, Repsol and OMV. Campaigners accused the ECB of undermining the EU’s environmental strategy by ‘building back dirtier’ and are calling on the bank to immediately exclude fossil fuel developers from its purchases and collateral framework.
From March 2020 to September 2021, the ECB’s corporate holdings rose by about 64% (€128.7bn). Based on previous research, Reclaim Finance estimates that the central bank bought 80 billion euros of bonds from carbon-intensive companies – including €15.3bn of fossil fuel bonds – with these new purchases (2).
These purchases notably benefited the five European oil and gas majors (3). These companies are some of the biggest carbon emitters in the world and their plans are at odds with the Paris Agreement and EU climate goals. According to Carbon Tracker, their planned investments in oil and gas production would drive us well above a 2.7°C global warming. Shell, TotalEnergies, Repsol and Eni are aggressively betting on liquified natural gas and are involved in unconventional oil and gas and major expansion projects.
From April 17th 2020 to September 3rd 2021, the number of bonds from these companies held by the ECB rose by 16.2%, increasing by 11 to a total of 79. The ECB acquired 15 such bonds during the pandemic. It notably acquired four bonds from TotalEnergies (+22.2%) and three from Eni (+20%). TotalEnergies is the main oil and gas major to have benefited from ECB’s purchases (22 bonds), followed by Eni (18 bonds) and Shell (17 bonds).
Paul Schreiber, campaigner at Reclaim Finance, explains: “So much for a green recovery. Despite calls to stop supporting fossil fuel development and to align itself with EU climate goals, the ECB increased its support to Europe’s biggest polluters over the course of the Covid pandemic. By expanding its asset purchases of oil and gas majors’ bonds, the ECB has essentially adopted a “build back dirtier” approach that makes a mockery of its recent climate pledges.”
Some of TotalEnergies and Shell’s bonds held by the ECB won’t be repaid before 2040 and 2039 respectively. Similarly, the bank will keep bonds from Repsol, OMV and Eni until at least 2033, 2034 and 2031.
Schreiber continues: “The ECB warns of the systemic risk (3) climate change poses for the financial system but, at the same time, holds long-term debt from oil and gas majors whose strategies are a recipe for climate disaster. The fossil fuel projects undertaken by these companies will significantly exacerbate the climate crisis and will eventually become stranded, too, thus maximizing harm for all, and physical and transition risks for the financial industry and the ECB itself. By supporting them, the ECB is failing to uphold its mandate on all counts.”
Despite more than 170 000 Europeans (4) calling on it to stop supporting big polluters, the ECB’s new climate roadmap does not prevent it from buying additional bonds from fossil fuel developers (5), making it likely that the bank will maintain or increase its support to the five European oil and gas majors in the coming months and years.