Stability Through Sustainability

The manifesto calls for the ECB to update its 2021 Climate Roadmap by introducing green refinancing operations, greening the collateral framework, and proactively tilting its asset portfolios. It argues that current monetary policies may distort the energy transition and that the ECB should use its toolkit to support a Paris-aligned transition to mitigate 'fossilflation' and systemic financial risks.

• The ECB's 2021 Climate Roadmap has had limited concrete effects on monetary policy, as the 'green tilt' of corporate sector purchases lost relevance due to quantitative tightening and planned collateral framework changes were postponed.
• High interest rates create a distortionary effect that negatively impacts renewable energy investments compared to fossil fuels; for example, increasing the cost of capital from 5% to 10% would raise offshore wind and rooftop solar electricity costs by 47% and 60% respectively, while gas-generated electricity would only increase by 8%.
• The authors recommend the ECB introduce a structural green targeted longer-term refinancing operations (TLTROs) programme by the end of 2025, initially focusing on EU taxonomy-aligned activities like renewable energy and buildings' retrofit to combat 'fossilflation'.
• The Eurosystem collateral framework is biased toward high-emitting companies, with some fossil-fuel bonds receiving haircuts as low as 1%, despite the European Insurance and Occupational Pension Authority (EIOPA) recognizing in November 2024 that fossil fuel assets pose higher risks.
• The ECB should move from a 'flow' approach to a 'stock' approach for its asset portfolios, proactively selling bonds from companies that delay the transition—including fossil fuel companies—rather than waiting for assets to reach maturity.
• The document asserts that conventional economic models used by central banks underestimate the costs of climate change and fail to account for critical risks such as climate tipping points, mass migration, and sea level rise.

APA

Murphy, C., Harris, T., Carella, C., Pass, C., Abdelli, M., Bosch, J. S., Casonato, L., Ramos, P., Moro, B., Kalinowski, W., Hauke, F., Degiacomi, M., Schreiber, P., & Belmonte, S. M. (2025). Stability Through Sustainability. Reclaim Finance. https://reclaimfinance.org/site/wp-content/uploads/2025/01/Stability-Through-Sustainability-Manifesto.pdf

Chicago

Murphy, Clarisse, Theo Harris, Carolin Carella, Chiara Pass, Maud Abdelli, Jordi Schröder Bosch, Laura Casonato, et al. Stability Through Sustainability. Reclaim Finance, 2025. https://reclaimfinance.org/site/wp-content/uploads/2025/01/Stability-Through-Sustainability-Manifesto.pdf.

Wikipedia

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BibTeX

@techreport{murphy2025stability, author = {Murphy, Clarisse and Harris, Theo and Carella, Carolin and Pass, Chiara and Abdelli, Maud and Bosch, Jordi Schröder and Casonato, Laura and Ramos, Philippe and Moro, Beatrice and Kalinowski, Wojtek and Hauke, Fiona and Degiacomi, Maurizio and Schreiber, Paul and Belmonte, Susana Martín}, title = {{Stability Through Sustainability}}, institution = {Reclaim Finance}, year = {2025}, month = jan, url = {https://reclaimfinance.org/site/wp-content/uploads/2025/01/Stability-Through-Sustainability-Manifesto.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }