ECB's Fossil Fuel Finance Exposed as Biodiversity Threat

The European Central Bank (ECB) is accused of indirectly supporting biodiversity loss by financing fossil fuel companies operating in critical nature areas, according to a report.

A study by French thinktank Reclaim Finance found that one in ten bonds in the ECB's corporate monetary portfolios are tied to companies with fossil fuel activities in key biodiversity areas. These include oil giants TotalEnergies and BP, whose projects threaten areas like the Coral Triangle.

Reclaim Finance claims that banks have provided $161 billion to these companies between 2021 and 2025, while the ECB holds assets from them. The report urges the ECB to exclude all assets tied to companies with fossil fuel activities in critical biodiversity areas and require banks to include a roadmap for stopping financial support for projects that damage key ecosystems.

However, an official familiar with the issue suggests that excluding certain issuers would conflict with the ECB's primary mandate of maintaining price stability. The report also notes that mandates vary by central bank, with some banning assets linked to coal.