ECB Urged to Target Banks Trailing on Climate

The European Central Bank should impose greater so-called haircuts on the debt of banks most exposed to climate risk, in a move that would impact the funding costs of environmental laggards.

That’s according to the Anthropocene Fixed Income Institute, which has been scrutinizing the ECB’s support of polluting bond issuers for years. The central bank has announced it will start applying climate-risk penalties to corporate bonds used as collateral in transactions starting in the second half of next year.