Dear European Central Bank,

In January, the ECB launched the review of its monetary policy strategy. Due to the Covid crisis, the review was postponed and should be conducted by mid-2021. One of the main objectives of the review is to evaluate the effectiveness and potential side effects of the monetary policy conducted by the ECB. To reach this objective, a complete knowledge of the use of unconventional monetary operations is needed.

Today, the ECB discloses the corporate bonds it holds under the CSPP and the PEPP and the total value of its purchase under these programs. However, the ECB doesn’t disclose the value of each separate bond held under the CSPP and PEPP.

Despite the fact that the “greening” of the APP is one of the strategic orientations that have to be discussed during the strategic review, the non-disclosure of bond value makes it impossible to know what CSPP and PEPP finance and, therefore, to determine their environmental impacts. Amid the Covid crisis, the non-disclosure of bond value conceals the amount of financing that PEPP provides to critical sectors such as healthcare.

Given these elements, under the right of access to documents in the EU treaties, as developed in Regulation 1049/2001, I am requesting documents which contain the separate bond value of CSPP and PEPP assets held by the ECB and the Eurosystem.

Yours faithfully,

Paul Schreiber

Campaigner on the Supervision of Financial Actors
Reclaim Finance

Access to documents,

Dear Mr Schreiber,

Thank you for your request, which we have received on 22 April 2020, for
access to European Central Bank (ECB) documents.

In accordance with [1]Decision ECB/2004/3 on public access to ECB
documents, as last amended, you will receive a reply within 20 working
days.

Yours sincerely,

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[2][email address]

 

Privacy notice: By submitting a request for access to documents, the ECB
collects information about you for the sole purpose of processing your
request in accordance with Decision ECB/2004/3 on public access to ECB
documents. All personal data are processed in accordance with EU Data
Protection Law (Regulation (EU) 2018/1725). The ECB is the controller for
the processing of the personal data. The recipients of the data will be
the ECB’s Compliance and Governance Office and, only when necessary, other
institutions within the European System of Central Banks, the Single
Supervisory Mechanism, or EU institutions.

You have the right to restrict processing and to access, rectify and under
certain conditions to request deletion of your stored personal data. You
can exercise your rights by contacting the ECB's Compliance and Governance
Office ([3][email address]) or the ECB’s Data Protection
Officer ([4][email address]).Furthermore, you have the right to address
the European Data Protection Supervisor ([5]www.edps.europa.eu) any time
regarding this processing of your personal data.

 

 

show quoted sections

Dear Access to documents,

We noticed that no answer was provided to the request for the disclosure of separate bond value under CSPP and PEPP within the legal period of 20 working days.

Please indicate if an extension is needed and when an answer can be expected.

Yours sincerely,

Paul Schreiber

Reclaim Finance

Access to documents,

Dear Mr Schreiber,
 
The deadline for the reply to your request received on 22 April 2020 will
elapse on 20 May 2020. We regret to inform you that due to exceptional
workload, we have to invoke Article 8.2 of [1]Decision ECB/2004/3 on
public access to ECB documents and extend the time limit provided to reply
to your request by an additional 20 working days (excluding ECB holidays).
 
Please rest assured that we are giving careful consideration to your
request and will endeavour to reply within the new time limit.
 
Yours sincerely,
 
Compliance and Governance Office
DG Secretariat
European Central Bank
Sonnemannstrasse 20
60314 Frankfurt am Main
[2][email address]
[3][email address]
 

show quoted sections

Dear European Central Bank,

Please pass this on to the person who reviews confirmatory applications.

I am filing the following confirmatory application with regards to my access to documents request 'Disclosure of separate bond value under CSPP and PEPP'.

The European Central Bank already extended the time limite provided to respond to this request and, under all circumstance, should have responded to it by now.

A full history of my request and all correspondence is available on the Internet at this address: https://www.asktheeu.org/en/request/disc...

Yours faithfully,

Paul Schreiber

Access to documents,

Dear Mr Schreiber,

We refer to our message of 18 May 2020, informing you of the extension of the deadline for response to your request for access to European Central Bank (ECB) documents. Please kindly note that the extended deadline will only expire on Monday, 22 June. In this respect, the ECB reply, which is currently being finalised, could reach you shortly after expiry of the deadline.

We sincerely apologise in advance for the inconvenience that any additional delay may cause.

In the event of total or partial refusal of disclosure of the requested documents, you will be entitled to submit a confirmatory application in accordance with Article 7.2 of Decision ECB/2004/3 on public access to ECB documents.

Yours sincerely,

Compliance and Governance Office
DG Secretariat
European Central Bank
Sonnemannstrasse 20
60314 Frankfurt am Main
[email address]
[email address]

________________________________________
From: Paul Schreiber
Sent: Wednesday, 17 June 2020 16:57:25 (UTC+01:00) Amsterdam, Berlin, Bern, Rome, Stockholm, Vienna
To: [email address]
Subject: [EXT] Internal review of access to documents request - Disclosure of separate bond value under CSPP and PEPP

Dear European Central Bank,

Please pass this on to the person who reviews confirmatory applications.

I am filing the following confirmatory application with regards to my access to documents request 'Disclosure of separate bond value under CSPP and PEPP'.

The European Central Bank already extended the time limite provided to respond to this request and, under all circumstance, should have responded to it by now.

A full history of my request and all correspondence is available on the Internet at this address: https://www.asktheeu.org/en/request/disc...

Yours faithfully,

Paul Schreiber

-------------------------------------------------------------------
Please use this email address for all replies to this request:
[FOI #7876 email]

This message and all replies from European Central Bank will be published on the AsktheEU.org website. For more information see our dedicated page for EU public officials at https://www.asktheeu.org/en/help/officers

Please note that in some cases publication of requests and responses will be delayed.

-------------------------------------------------------------------
Any e-mail message from the European Central Bank (ECB) is sent in good faith, but shall neither be binding nor construed as constituting a commitment by the ECB except where provided for in a written agreement. This e-mail is intended only for the use of the recipient(s) named above. Any unauthorised disclosure, use or dissemination, either in whole or in part, is prohibited. If you have received this e-mail in error, please notify the sender immediately via e-mail and delete this e-mail from your system. The ECB processes personal data in line with Regulation (EU) 2018/1725. In case of queries, please contact the ECB Data Protection Officer ([email address]). You may also contact the European Data Protection Supervisor.

Dear European Central Bank,

Please pass this on to the person who reviews confirmatory applications.

I am filing the following confirmatory application with regards to my access to documents request 'Disclosure of separate bond value under CSPP and PEPP'.

As your previous response stated, the European Central Bank should have responded by June 22. However, one week later no answer has been provided.

A full history of my request and all correspondence is available on the Internet at this address: https://www.asktheeu.org/en/request/disc...

Yours faithfully,

Paul Schreiber

Access to documents,

1 Attachment

Dear Mr Schreiber,
Please find attached the ECB's reply to your request of 22 April 2020 for access to European Central Bank (ECB) documents.

Yours sincerely,

Compliance and Governance Office
DG Secretariat
European Central Bank
Sonnemannstrasse 20
60314 Frankfurt am Main
[email address]

show quoted sections

Dear European Central Bank,

Please pass this on to the person who reviews confirmatory applications.

I am filing the following confirmatory application with regards to my access to documents request 'Disclosure of separate bond value under CSPP and PEPP'.

I am dissatisfied with the ECB's refusal (LS/PS/2020/21) to provide access to the requested documents for the following reason.

I/ Basis of the ECB’s refusal to disclose the separate bond value of assets held under CSPP and PEPP

a. Regarding the Second indent of Article 4(1)(a) of Decision ECB/2004/3

The ECB's refusal relies on the Second indent of Article 4(1)(a) of Decision ECB/2004/3.

This Decision was taken at a time where environment was not one of the ECB’s concern. As such, it grants the ECB the possibility to refuse to disclose information when it “would undermine the protection of the public interest” but does not account for the fact that “the protection of the public interest” also entails the disclosure of detailed information on the climate impact of the ECB’s operations.

b. Regarding the effect of the disclosure on volatility and price discovery

The ECB refused the request arguing that "granting market participants access to detailed, disaggregated information regarding the CSPP/PEPP portfolios, could introduce undue volatility and distort price discovery in the market while compromising the effectiveness of the intervention measures and, potentially, their monetary policy objective".

I do not agree with the ECB for the following reasons:
1. The ECB provides no credible evidence or data to justify that the disclosure of separate bond value would “introduce undue volatility” or “distort price discovery”.
2. Market participants already have "detailed and disaggregated" information on the CSPP and PEEP portfolios as the list of corporate bond securities is already published and includes the ISIN of bonds. Yet, the ECB does not consider that this information "introduce undue volatility and distort price discovery".
3. Whether information is published or not, the ECB's asset purchases already impact "price discovery" and asset prices.

Moreover, the ECB indicates “that the disclosure of detailed, disaggregated data on the securities purchased and held under the CSPP/PEPP (such as the separate bond value of CSPP and PEPP assets held by the Eurosystem) in a centralized and complete manner would lead market participants to draw inferences about the Eurosystem holdings and adjust their own behavior according to assumptions established on the basis of the information made available”.

However, the ECB already discloses the list of CSPP/PEPP corporate bonds in a “centralized and complete manner” and it is not clear that the additional disclosure of bond value would lead market participants to significantly modify their behavior. Furthermore, as the ECB explains in its response, the list of corporate bond securities under CSPP/PEPP is published on a weekly basis and not in real time. If the bond values were to be published at the same time, they would give little usable information to market participants.

Finally, when it comes to the climate impact of asset purchases, an alternative to the disclosure of separate bond value would be for the ECB to disclose aggregated information about the climate impact of its bond purchases. Namely, the ECB would need to start by disclosing the information mentioned in the request for access to document : https://www.asktheeu.org/en/request/disc... .

II/ The ECB’s commentary related to the climate impact of its purchases and the disclosure of climate related information

a. Regarding the “neutrality” of asset purchases

The ECB writes that “the implementation of the APP and PEPP are guided by the principle of market neutrality and does not positively or negatively discriminate on the basis of environmental or any other criteria. In the specific case of the CSPP and PEPP, the purchases of securities issued by non-bank corporations reflect proportionally the market value of all eligible bonds in terms of sectors of economic activity and rating groups.”

This is not true, as the ECB’s portfolio is mainly composed of carbon-intensive sectors and is more exposed to fossil fuels and less to low-carbon transports than the rest of the market.

Furthermore, market neutrality negates the political dimension of monetary creation and is totally anachronistic in the context of the climate emergency. Getting on track for the COP21 climate objectives requires institutions to redirect financial flows to support a 1.5°C trajectory. The notion of the transition itself implies both exiting unsustainable sectors and developing sustainable alternatives.

Yet, by trying to reproduce the market, the principle of market neutrality reinforces a polluting and fossil fuel-dependent economy. This principle is out of step with mechanisms that are currently developing to integrate climate risks, with the NGFS, the Task Force On Financial Disclosure (TCFD) at the European level, the Science Based Target Initiative (SBTI) internationally, or Article 173 of the energy transition law (LTECV) in France. Also, by allowing for carbon-intensive assets to accumulate on the ECB’s balance, it exposes the ECB to important and unaccounted financial risks and a breach of its fiduciary duty.

On the other hand, the ECB’s climate intervention is fully justified by European law as it fulfills its complementary mandates. It would contribute to the EU’s objectives, favor the emergence of sustainable growth, and respect the Paris Agreement. By intervening, the ECB would follow the EU’s key objectives and principles: It would protect Europe from future COVID-like disasters and their unprecedented economic and financial consequences.

b. Regarding the lack of “granular and forward-looking analyses of the carbon intensity” and the shortcomings of sectoral data

For the ECB, “meaningful assessment of the environmental impacts of the ECB asset purchases requires granular and forward-looking analyses of the carbon intensity of the investments financed by the bond issuances that benefitted from our asset purchases. This is currently not possible given the existing data gaps.”.

I note that the ECB clearly states that its asset purchases have an environmental impact. But, while building additional knowledge is useful and needed to achieve a complete “greening” of the financial system, concrete and rapid action is crucial and ample information is available to act right now.

As the ECB’s asset purchases reached historical proportions amid the COVID crisis, finance 38 fossil fuel companies – even in coal and shale oil and gas – and could end up supporting polluters to up to 220 billion, we do not have time to wait and the strategic review won’t produce any concrete results before 2022.

In fact, to keep global warming close to 1.5°C, we need progressively phase out fossil fuels to live in a fossil free world by 2050. More precisely, we need to phase out coal as soon as 2030 in Europe and the OECD and 2040 worldwide and oil and gas ten years later. These key objectives should immediately be used to assess the impact of the ECB’s operations and reduce it, thus aligning with European climate objectives. As GHG emissions are concentrated in a few most polluting sectors – including fossil fuels – these objectives would allow the ECB to swiftly improve its carbon footprint.

The ECB would probably respond that “sectoral data do not capture large differences within sectors and, most importantly, ignore any dynamics within firms over time. An example of such shortcomings is that issuance of green bonds is typically concentrated in sectors such as utilities, infrastructure, transportation and construction, which based on backward looking sectoral data, would be considered carbon intensive, despite them financing sustainable projects.”

But this is not a valid argument: the reduction of GHG emissions requires to simultaneously reduce polluting activities and scale up low-carbon alternatives, this depends on the global policy of the company and not on a single project. To ensure that its asset purchases are in line with the ecological transition, the ECB needs to buy bonds from companies that adopt plans to align on a 1.5°C trajectory. For fossil fuels, this means adopting the previously mentioned objectives.

c. Regarding PEPP’s crucial place in the ECB’s response to the Covid-19

The ECB emphasizes that “the successful implementation of the PEPP is critical for an effective monetary policy transmission mechanism aimed at delivering the favourable financial conditions that are necessary to support the economy, in view of the severe risks to the outlook for the euro area posed by the COVID-19 pandemic”.

I would like to stress that the lack of climate criteria in the PEPP is rising climate-related risks and, by refusing to fight against climate change and protect nature, contributing to future Covid-like crisis. As many European leaders and financial players have stated, the response to Covid needs to be “green”. Monetary policy should not be exempted from this green imperative. Ending the support that PEPP provides to the most polluting companies is a logical and necessary step.

A full history of my request and all correspondence is available on the Internet at this address: https://www.asktheeu.org/en/request/disc...

Yours faithfully,

Paul Schreiber
Reclaim Finance

Access to documents,

Dear Mr Schreiber,

 

Thank you for your confirmatory application of 1 July 2020, for access to
European Central Bank (ECB) documents.

In accordance with Decision ECB/2004/3 on public access to ECB documents,
as last amended, you will receive a reply within 20 working days.

 

Yours sincerely

 

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[email address]

 

 

 

________________________________________

From: Paul Schreiber

Sent: Wednesday, 01 July 2020 14:47:49 (UTC+01:00) Amsterdam, Berlin,
Bern, Rome, Stockholm, Vienna

To: [email address]

Subject: [EXT] Internal review of access to documents request - Disclosure
of separate bond value under CSPP and PEPP

 

Dear European Central Bank,

 

Please pass this on to the person who reviews confirmatory applications.

 

I am filing the following confirmatory application with regards to my
access to documents request 'Disclosure of separate bond value under CSPP
and PEPP'.

 

I am dissatisfied with the ECB's refusal (LS/PS/2020/21) to provide access
to the requested documents for the following reason.

 

I/ Basis of the ECB’s refusal to disclose the separate bond value of
assets held under CSPP and PEPP

 

a. Regarding the Second indent of Article 4(1)(a) of Decision ECB/2004/3

 

The ECB's refusal relies on the Second indent of Article 4(1)(a) of
Decision ECB/2004/3.

 

This Decision was taken at a time where environment was not one of the
ECB’s concern. As such, it grants the ECB the possibility to refuse to
disclose information when it “would undermine the protection of the public
interest” but does not account for the fact that “the protection of the
public interest” also entails the disclosure of detailed information on
the climate impact of the ECB’s operations.

 

b. Regarding the effect of the disclosure on volatility and price
discovery

 

The ECB refused the request arguing that "granting market participants
access to detailed, disaggregated information regarding the CSPP/PEPP
portfolios, could introduce undue volatility and distort price discovery
in the market while compromising the effectiveness of the intervention
measures and, potentially, their monetary policy objective".

 

I do not agree with the ECB for the following reasons:

1.      The ECB provides no credible evidence or data to justify that the
disclosure of separate bond value would “introduce undue volatility” or
“distort price discovery”.

2.      Market participants already have "detailed and disaggregated"
information on the CSPP and PEEP portfolios as the list of corporate bond
securities is already published and includes the ISIN of bonds. Yet, the
ECB does not consider that this information "introduce undue volatility
and distort price discovery".

3.      Whether information is published or not, the ECB's asset purchases
already impact "price discovery" and asset prices.

 

Moreover, the ECB indicates “that the disclosure of detailed,
disaggregated data on the securities purchased and held under the
CSPP/PEPP (such as the separate bond value of CSPP and PEPP assets held by
the Eurosystem) in a centralized and complete manner would lead market
participants to draw inferences about the Eurosystem holdings and adjust
their own behavior according to assumptions established on the basis of
the information made available”.

 

However, the ECB already discloses the list of CSPP/PEPP corporate bonds
in a “centralized and complete manner” and it is not clear that the
additional disclosure of bond value would lead market participants to
significantly modify their behavior. Furthermore, as the ECB explains in
its response, the list of corporate bond securities under CSPP/PEPP is
published on a weekly basis and not in real time. If the bond values were
to be published at the same time, they would give little usable
information to market participants.

 

Finally, when it comes to the climate impact of asset purchases, an
alternative to the disclosure of separate bond value would be for the ECB
to disclose aggregated information about the climate impact of its bond
purchases. Namely, the ECB would need to start by disclosing the
information mentioned in the request for access to document :
https://www.asktheeu.org/en/request/disc...
.

 

II/ The ECB’s commentary related to the climate impact of its purchases
and the disclosure of climate related information

 

a. Regarding the “neutrality” of asset purchases

 

The ECB writes that “the implementation of the APP and PEPP are guided by
the principle of market neutrality and does not positively or negatively
discriminate on the basis of environmental or any other criteria. In the
specific case of the CSPP and PEPP, the purchases of securities issued by
non-bank corporations reflect proportionally the market value of all
eligible bonds in terms of sectors of economic activity and rating
groups.”

 

This is not true, as the ECB’s portfolio is mainly composed of
carbon-intensive sectors and is more exposed to fossil fuels and less to
low-carbon transports than the rest of the market.

 

Furthermore, market neutrality negates the political dimension of monetary
creation and is totally anachronistic in the context of the climate
emergency. Getting on track for the COP21 climate objectives requires
institutions to redirect financial flows to support a 1.5°C trajectory.
The notion of the transition itself implies both exiting unsustainable
sectors and developing sustainable alternatives.

 

Yet, by trying to reproduce the market, the principle of market neutrality
reinforces a polluting and fossil fuel-dependent economy. This principle
is out of step with mechanisms that are currently developing to integrate
climate risks, with the NGFS, the Task Force On Financial Disclosure
(TCFD) at the European level, the Science Based Target Initiative (SBTI)
internationally, or Article 173 of the energy transition law (LTECV) in
France. Also, by allowing for carbon-intensive assets to accumulate on the
ECB’s balance, it exposes the ECB to important and unaccounted financial
risks and a breach of its fiduciary duty.

 

On the other hand, the ECB’s climate intervention is fully justified by
European law as it fulfills its complementary mandates. It would
contribute to the EU’s objectives, favor the emergence of sustainable
growth, and respect the Paris Agreement. By intervening, the ECB would
follow the EU’s key objectives and principles: It would protect Europe
from future COVID-like disasters and their unprecedented economic and
financial consequences.

 

b. Regarding the lack of “granular and forward-looking analyses of the
carbon intensity” and the shortcomings of sectoral data

 

For the ECB, “meaningful assessment of the environmental impacts of the
ECB asset purchases requires granular and forward-looking analyses of the
carbon intensity of the investments financed by the bond issuances that
benefitted from our asset purchases. This is currently not possible given
the existing data gaps.”.

 

I note that the ECB clearly states that its asset purchases have an
environmental impact. But, while building additional knowledge is useful
and needed to achieve a complete “greening” of the financial system,
concrete and rapid action is crucial and ample information is available to
act right now.

 

As the ECB’s asset purchases reached historical proportions amid the COVID
crisis, finance 38 fossil fuel companies – even in coal and shale oil and
gas – and could end up supporting polluters to up to 220 billion, we do
not have time to wait and the strategic review won’t produce any concrete
results before 2022.

 

In fact, to keep global warming close to 1.5°C, we need progressively
phase out fossil fuels to live in a fossil free world by 2050. More
precisely, we need to phase out coal as soon as 2030 in Europe and the
OECD and 2040 worldwide and oil and gas ten years later. These key
objectives should immediately be used to assess the impact of the ECB’s
operations and reduce it, thus aligning with European climate objectives.
As GHG emissions are concentrated in a few most polluting sectors –
including fossil fuels – these objectives would allow the ECB to swiftly
improve its carbon footprint.

 

The ECB would probably respond that “sectoral data do not capture large
differences within sectors and, most importantly, ignore any dynamics
within firms over time. An example of such shortcomings is that issuance
of green bonds is typically concentrated in sectors such as utilities,
infrastructure, transportation and construction, which based on backward
looking sectoral data, would be considered carbon intensive, despite them
financing sustainable projects.”

 

But this is not a valid argument: the reduction of GHG emissions requires
to simultaneously reduce polluting activities and scale up low-carbon
alternatives, this depends on the global policy of the company and not on
a single project. To ensure that its asset purchases are in line with the
ecological transition, the ECB needs to buy bonds from companies that
adopt plans to align on a 1.5°C trajectory. For fossil fuels, this means
adopting the previously mentioned objectives.

 

c. Regarding PEPP’s crucial place in the ECB’s response to the Covid-19

 

The ECB emphasizes that “the successful implementation of the PEPP is
critical for an effective monetary policy transmission mechanism aimed at
delivering the favourable financial conditions that are necessary to
support the economy, in view of the severe risks to the outlook for the
euro area posed by the COVID-19 pandemic”.

 

I would like to stress that the lack of climate criteria in the PEPP is
rising climate-related risks and, by refusing to fight against climate
change and protect nature, contributing to future Covid-like crisis. As
many European leaders and financial players have stated, the response to
Covid needs to be “green”. Monetary policy should not be exempted from
this green imperative. Ending the support that PEPP provides to the most
polluting companies is a logical and necessary step.

 

A full history of my request and all correspondence is available on the
Internet at this address:
https://www.asktheeu.org/en/request/disc...

 

Yours faithfully,

 

Paul Schreiber

Reclaim Finance

 

 

 

-------------------------------------------------------------------

Please use this email address for all replies to this request:

[FOI #7876 email]

 

This message and all replies from European Central Bank will be published
on the AsktheEU.org website. For more information see our dedicated page
for EU public officials at https://www.asktheeu.org/en/help/officers

 

Please note that in some cases publication of requests and responses will
be delayed.

 

-------------------------------------------------------------------

Any e-mail message from the European Central Bank (ECB) is sent in good
faith, but shall neither be binding nor construed as constituting a
commitment by the ECB except where provided for in a written agreement.
This e-mail is intended only for the use of the recipient(s) named above.
Any unauthorised disclosure, use or dissemination, either in whole or in
part, is prohibited. If you have received this e-mail in error, please
notify the sender immediately via e-mail and delete this e-mail from your
system. The ECB processes personal data in line with Regulation (EU)
2018/1725. In case of queries, please contact the ECB Data Protection
Officer ([email address]). You may also contact the European Data
Protection Supervisor.

Access to documents,

Dear Mr Schreiber,

 

We would like to inform you that your confirmatory application of 1 July
2020 for European Central Bank (ECB) documents which contain the separate
bond value of CSPP and PEPP assets held by the ECB and the Eurosystem has
been put on hold until our reply to your request of 22 April 2020, being
processed since 30 June 2020, for access to European Central Bank (ECB)
documents related to documents which contain the following information:
(1) The amount and value of CSPP and PEPP assets and purchases linked to
fossil fuel companies; (2) The amount and value of CSPP and PEPP assets
and purchases linked to the companies listed on the Global Coal Exit List;
and (3) The distribution of CSPP and PEPP assets and purchases by sector
or activity, has been finalised.

 

Please rest assured that once the reply to your second request has been
finalised, we will start with the assessment of your confirmatory
application of 1 July 2020.

 

We thank you for your understanding and apologize for the inconvenience
this additional delay may cause.

 

Yours sincerely

 

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[1][email address]

 

From: Access to documents
Sent: 03 July 2020 17:24
To: [FOI #7876 email]
Subject: RE: [EXT] Acknowledgement of receipt of confirmatory application
- Internal review of access to documents request - Disclosure of separate
bond value under CSPP and PEPP

 

Dear Mr Schreiber,

 

Thank you for your confirmatory application of 1 July 2020, for access to
European Central Bank (ECB) documents.

In accordance with Decision ECB/2004/3 on public access to ECB documents,
as last amended, you will receive a reply within 20 working days.

 

Yours sincerely

 

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[email address]

 

 

 

________________________________________

From: Paul Schreiber

Sent: Wednesday, 01 July 2020 14:47:49 (UTC+01:00) Amsterdam, Berlin,
Bern, Rome, Stockholm, Vienna

To: [email address]

Subject: [EXT] Internal review of access to documents request - Disclosure
of separate bond value under CSPP and PEPP

 

Dear European Central Bank,

 

Please pass this on to the person who reviews confirmatory applications.

 

I am filing the following confirmatory application with regards to my
access to documents request 'Disclosure of separate bond value under CSPP
and PEPP'.

 

I am dissatisfied with the ECB's refusal (LS/PS/2020/21) to provide access
to the requested documents for the following reason.

 

I/ Basis of the ECB’s refusal to disclose the separate bond value of
assets held under CSPP and PEPP

 

a. Regarding the Second indent of Article 4(1)(a) of Decision ECB/2004/3

 

The ECB's refusal relies on the Second indent of Article 4(1)(a) of
Decision ECB/2004/3.

 

This Decision was taken at a time where environment was not one of the
ECB’s concern. As such, it grants the ECB the possibility to refuse to
disclose information when it “would undermine the protection of the public
interest” but does not account for the fact that “the protection of the
public interest” also entails the disclosure of detailed information on
the climate impact of the ECB’s operations.

 

b. Regarding the effect of the disclosure on volatility and price
discovery

 

The ECB refused the request arguing that "granting market participants
access to detailed, disaggregated information regarding the CSPP/PEPP
portfolios, could introduce undue volatility and distort price discovery
in the market while compromising the effectiveness of the intervention
measures and, potentially, their monetary policy objective".

 

I do not agree with the ECB for the following reasons:

1.      The ECB provides no credible evidence or data to justify that the
disclosure of separate bond value would “introduce undue volatility” or
“distort price discovery”.

2.      Market participants already have "detailed and disaggregated"
information on the CSPP and PEEP portfolios as the list of corporate bond
securities is already published and includes the ISIN of bonds. Yet, the
ECB does not consider that this information "introduce undue volatility
and distort price discovery".

3.      Whether information is published or not, the ECB's asset purchases
already impact "price discovery" and asset prices.

 

Moreover, the ECB indicates “that the disclosure of detailed,
disaggregated data on the securities purchased and held under the
CSPP/PEPP (such as the separate bond value of CSPP and PEPP assets held by
the Eurosystem) in a centralized and complete manner would lead market
participants to draw inferences about the Eurosystem holdings and adjust
their own behavior according to assumptions established on the basis of
the information made available”.

 

However, the ECB already discloses the list of CSPP/PEPP corporate bonds
in a “centralized and complete manner” and it is not clear that the
additional disclosure of bond value would lead market participants to
significantly modify their behavior. Furthermore, as the ECB explains in
its response, the list of corporate bond securities under CSPP/PEPP is
published on a weekly basis and not in real time. If the bond values were
to be published at the same time, they would give little usable
information to market participants.

 

Finally, when it comes to the climate impact of asset purchases, an
alternative to the disclosure of separate bond value would be for the ECB
to disclose aggregated information about the climate impact of its bond
purchases. Namely, the ECB would need to start by disclosing the
information mentioned in the request for access to document :
https://www.asktheeu.org/en/request/disc...
.

 

II/ The ECB’s commentary related to the climate impact of its purchases
and the disclosure of climate related information

 

a. Regarding the “neutrality” of asset purchases

 

The ECB writes that “the implementation of the APP and PEPP are guided by
the principle of market neutrality and does not positively or negatively
discriminate on the basis of environmental or any other criteria. In the
specific case of the CSPP and PEPP, the purchases of securities issued by
non-bank corporations reflect proportionally the market value of all
eligible bonds in terms of sectors of economic activity and rating
groups.”

 

This is not true, as the ECB’s portfolio is mainly composed of
carbon-intensive sectors and is more exposed to fossil fuels and less to
low-carbon transports than the rest of the market.

 

Furthermore, market neutrality negates the political dimension of monetary
creation and is totally anachronistic in the context of the climate
emergency. Getting on track for the COP21 climate objectives requires
institutions to redirect financial flows to support a 1.5°C trajectory.
The notion of the transition itself implies both exiting unsustainable
sectors and developing sustainable alternatives.

 

Yet, by trying to reproduce the market, the principle of market neutrality
reinforces a polluting and fossil fuel-dependent economy. This principle
is out of step with mechanisms that are currently developing to integrate
climate risks, with the NGFS, the Task Force On Financial Disclosure
(TCFD) at the European level, the Science Based Target Initiative (SBTI)
internationally, or Article 173 of the energy transition law (LTECV) in
France. Also, by allowing for carbon-intensive assets to accumulate on the
ECB’s balance, it exposes the ECB to important and unaccounted financial
risks and a breach of its fiduciary duty.

 

On the other hand, the ECB’s climate intervention is fully justified by
European law as it fulfills its complementary mandates. It would
contribute to the EU’s objectives, favor the emergence of sustainable
growth, and respect the Paris Agreement. By intervening, the ECB would
follow the EU’s key objectives and principles: It would protect Europe
from future COVID-like disasters and their unprecedented economic and
financial consequences.

 

b. Regarding the lack of “granular and forward-looking analyses of the
carbon intensity” and the shortcomings of sectoral data

 

For the ECB, “meaningful assessment of the environmental impacts of the
ECB asset purchases requires granular and forward-looking analyses of the
carbon intensity of the investments financed by the bond issuances that
benefitted from our asset purchases. This is currently not possible given
the existing data gaps.”.

 

I note that the ECB clearly states that its asset purchases have an
environmental impact. But, while building additional knowledge is useful
and needed to achieve a complete “greening” of the financial system,
concrete and rapid action is crucial and ample information is available to
act right now.

 

As the ECB’s asset purchases reached historical proportions amid the COVID
crisis, finance 38 fossil fuel companies – even in coal and shale oil and
gas – and could end up supporting polluters to up to 220 billion, we do
not have time to wait and the strategic review won’t produce any concrete
results before 2022.

 

In fact, to keep global warming close to 1.5°C, we need progressively
phase out fossil fuels to live in a fossil free world by 2050. More
precisely, we need to phase out coal as soon as 2030 in Europe and the
OECD and 2040 worldwide and oil and gas ten years later. These key
objectives should immediately be used to assess the impact of the ECB’s
operations and reduce it, thus aligning with European climate objectives.
As GHG emissions are concentrated in a few most polluting sectors –
including fossil fuels – these objectives would allow the ECB to swiftly
improve its carbon footprint.

 

The ECB would probably respond that “sectoral data do not capture large
differences within sectors and, most importantly, ignore any dynamics
within firms over time. An example of such shortcomings is that issuance
of green bonds is typically concentrated in sectors such as utilities,
infrastructure, transportation and construction, which based on backward
looking sectoral data, would be considered carbon intensive, despite them
financing sustainable projects.”

 

But this is not a valid argument: the reduction of GHG emissions requires
to simultaneously reduce polluting activities and scale up low-carbon
alternatives, this depends on the global policy of the company and not on
a single project. To ensure that its asset purchases are in line with the
ecological transition, the ECB needs to buy bonds from companies that
adopt plans to align on a 1.5°C trajectory. For fossil fuels, this means
adopting the previously mentioned objectives.

 

c. Regarding PEPP’s crucial place in the ECB’s response to the Covid-19

 

The ECB emphasizes that “the successful implementation of the PEPP is
critical for an effective monetary policy transmission mechanism aimed at
delivering the favourable financial conditions that are necessary to
support the economy, in view of the severe risks to the outlook for the
euro area posed by the COVID-19 pandemic”.

 

I would like to stress that the lack of climate criteria in the PEPP is
rising climate-related risks and, by refusing to fight against climate
change and protect nature, contributing to future Covid-like crisis. As
many European leaders and financial players have stated, the response to
Covid needs to be “green”. Monetary policy should not be exempted from
this green imperative. Ending the support that PEPP provides to the most
polluting companies is a logical and necessary step.

 

A full history of my request and all correspondence is available on the
Internet at this address:
https://www.asktheeu.org/en/request/disc...

 

Yours faithfully,

 

Paul Schreiber

Reclaim Finance

 

 

 

-------------------------------------------------------------------

Please use this email address for all replies to this request:

[FOI #7876 email]

 

This message and all replies from European Central Bank will be published
on the AsktheEU.org website. For more information see our dedicated page
for EU public officials at https://www.asktheeu.org/en/help/officers

 

Please note that in some cases publication of requests and responses will
be delayed.

 

-------------------------------------------------------------------

Any e-mail message from the European Central Bank (ECB) is sent in good
faith, but shall neither be binding nor construed as constituting a
commitment by the ECB except where provided for in a written agreement.
This e-mail is intended only for the use of the recipient(s) named above.
Any unauthorised disclosure, use or dissemination, either in whole or in
part, is prohibited. If you have received this e-mail in error, please
notify the sender immediately via e-mail and delete this e-mail from your
system. The ECB processes personal data in line with Regulation (EU)
2018/1725. In case of queries, please contact the ECB Data Protection
Officer ([email address]). You may also contact the European Data
Protection Supervisor.

References

Visible links
1. mailto:[email address]

Access to documents,

Dear Mr Schreiber,

 

would like to inform you that on 25 August 2020, after having finalised
the reply to your request with in relation to documents which contain the
following information: (1) The amount and value of CSPP and PEPP assets
and purchases linked to fossil fuel companies; (2) The amount and value of
CSPP and PEPP assets and purchases linked to the companies listed on the
Global Coal Exit List; and (3) The distribution of CSPP and PEPP assets
and purchases by sector or activity, your confirmatory application of 1
July 2020 for European Central Bank (ECB) documents which contain the
separate bond value of CSPP and PEPP assets held by the ECB and the
Eurosystem has started being processed.

 

This request will be answered within 20 working days (ECB holidays
excluded) in accordance with the Decision of the European Central Bank of
4 March 2004 on public access to European Central Bank documents
(BCE/2004/3):

[1]https://eur-lex.europa.eu/legal-content/...

 

Yours sincerely,

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[2][email address]

 

 

From: Access to documents
Sent: 13 August 2020 16:45
To: [FOI #7876 email]
Cc: Access to documents
Subject: [EXT] Your confirmatory application for access to documents
relating to the separate bond value under CSPP and PEPP

 

Dear Mr Schreiber,

 

We would like to inform you that your confirmatory application of 1 July
2020 for European Central Bank (ECB) documents which contain the separate
bond value of CSPP and PEPP assets held by the ECB and the Eurosystem has
been put on hold until our reply to your request of 22 April 2020, being
processed since 30 June 2020, for access to European Central Bank (ECB)
documents related to documents which contain the following information:
(1) The amount and value of CSPP and PEPP assets and purchases linked to
fossil fuel companies; (2) The amount and value of CSPP and PEPP assets
and purchases linked to the companies listed on the Global Coal Exit List;
and (3) The distribution of CSPP and PEPP assets and purchases by sector
or activity, has been finalised.

 

Please rest assured that once the reply to your second request has been
finalised, we will start with the assessment of your confirmatory
application of 1 July 2020.

 

We thank you for your understanding and apologize for the inconvenience
this additional delay may cause.

 

Yours sincerely

 

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[3][email address]

 

From: Access to documents
Sent: 03 July 2020 17:24
To: [FOI #7876 email]
Subject: RE: [EXT] Acknowledgement of receipt of confirmatory application
- Internal review of access to documents request - Disclosure of separate
bond value under CSPP and PEPP

 

Dear Mr Schreiber,

 

Thank you for your confirmatory application of 1 July 2020, for access to
European Central Bank (ECB) documents.

In accordance with Decision ECB/2004/3 on public access to ECB documents,
as last amended, you will receive a reply within 20 working days.

 

Yours sincerely

 

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[email address]

 

 

 

________________________________________

From: Paul Schreiber

Sent: Wednesday, 01 July 2020 14:47:49 (UTC+01:00) Amsterdam, Berlin,
Bern, Rome, Stockholm, Vienna

To: [email address]

Subject: [EXT] Internal review of access to documents request - Disclosure
of separate bond value under CSPP and PEPP

 

Dear European Central Bank,

 

Please pass this on to the person who reviews confirmatory applications.

 

I am filing the following confirmatory application with regards to my
access to documents request 'Disclosure of separate bond value under CSPP
and PEPP'.

 

I am dissatisfied with the ECB's refusal (LS/PS/2020/21) to provide access
to the requested documents for the following reason.

 

I/ Basis of the ECB’s refusal to disclose the separate bond value of
assets held under CSPP and PEPP

 

a. Regarding the Second indent of Article 4(1)(a) of Decision ECB/2004/3

 

The ECB's refusal relies on the Second indent of Article 4(1)(a) of
Decision ECB/2004/3.

 

This Decision was taken at a time where environment was not one of the
ECB’s concern. As such, it grants the ECB the possibility to refuse to
disclose information when it “would undermine the protection of the public
interest” but does not account for the fact that “the protection of the
public interest” also entails the disclosure of detailed information on
the climate impact of the ECB’s operations.

 

b. Regarding the effect of the disclosure on volatility and price
discovery

 

The ECB refused the request arguing that "granting market participants
access to detailed, disaggregated information regarding the CSPP/PEPP
portfolios, could introduce undue volatility and distort price discovery
in the market while compromising the effectiveness of the intervention
measures and, potentially, their monetary policy objective".

 

I do not agree with the ECB for the following reasons:

1.      The ECB provides no credible evidence or data to justify that the
disclosure of separate bond value would “introduce undue volatility” or
“distort price discovery”.

2.      Market participants already have "detailed and disaggregated"
information on the CSPP and PEEP portfolios as the list of corporate bond
securities is already published and includes the ISIN of bonds. Yet, the
ECB does not consider that this information "introduce undue volatility
and distort price discovery".

3.      Whether information is published or not, the ECB's asset purchases
already impact "price discovery" and asset prices.

 

Moreover, the ECB indicates “that the disclosure of detailed,
disaggregated data on the securities purchased and held under the
CSPP/PEPP (such as the separate bond value of CSPP and PEPP assets held by
the Eurosystem) in a centralized and complete manner would lead market
participants to draw inferences about the Eurosystem holdings and adjust
their own behavior according to assumptions established on the basis of
the information made available”.

 

However, the ECB already discloses the list of CSPP/PEPP corporate bonds
in a “centralized and complete manner” and it is not clear that the
additional disclosure of bond value would lead market participants to
significantly modify their behavior. Furthermore, as the ECB explains in
its response, the list of corporate bond securities under CSPP/PEPP is
published on a weekly basis and not in real time. If the bond values were
to be published at the same time, they would give little usable
information to market participants.

 

Finally, when it comes to the climate impact of asset purchases, an
alternative to the disclosure of separate bond value would be for the ECB
to disclose aggregated information about the climate impact of its bond
purchases. Namely, the ECB would need to start by disclosing the
information mentioned in the request for access to document :
https://www.asktheeu.org/en/request/disc...
.

 

II/ The ECB’s commentary related to the climate impact of its purchases
and the disclosure of climate related information

 

a. Regarding the “neutrality” of asset purchases

 

The ECB writes that “the implementation of the APP and PEPP are guided by
the principle of market neutrality and does not positively or negatively
discriminate on the basis of environmental or any other criteria. In the
specific case of the CSPP and PEPP, the purchases of securities issued by
non-bank corporations reflect proportionally the market value of all
eligible bonds in terms of sectors of economic activity and rating
groups.”

 

This is not true, as the ECB’s portfolio is mainly composed of
carbon-intensive sectors and is more exposed to fossil fuels and less to
low-carbon transports than the rest of the market.

 

Furthermore, market neutrality negates the political dimension of monetary
creation and is totally anachronistic in the context of the climate
emergency. Getting on track for the COP21 climate objectives requires
institutions to redirect financial flows to support a 1.5°C trajectory.
The notion of the transition itself implies both exiting unsustainable
sectors and developing sustainable alternatives.

 

Yet, by trying to reproduce the market, the principle of market neutrality
reinforces a polluting and fossil fuel-dependent economy. This principle
is out of step with mechanisms that are currently developing to integrate
climate risks, with the NGFS, the Task Force On Financial Disclosure
(TCFD) at the European level, the Science Based Target Initiative (SBTI)
internationally, or Article 173 of the energy transition law (LTECV) in
France. Also, by allowing for carbon-intensive assets to accumulate on the
ECB’s balance, it exposes the ECB to important and unaccounted financial
risks and a breach of its fiduciary duty.

 

On the other hand, the ECB’s climate intervention is fully justified by
European law as it fulfills its complementary mandates. It would
contribute to the EU’s objectives, favor the emergence of sustainable
growth, and respect the Paris Agreement. By intervening, the ECB would
follow the EU’s key objectives and principles: It would protect Europe
from future COVID-like disasters and their unprecedented economic and
financial consequences.

 

b. Regarding the lack of “granular and forward-looking analyses of the
carbon intensity” and the shortcomings of sectoral data

 

For the ECB, “meaningful assessment of the environmental impacts of the
ECB asset purchases requires granular and forward-looking analyses of the
carbon intensity of the investments financed by the bond issuances that
benefitted from our asset purchases. This is currently not possible given
the existing data gaps.”.

 

I note that the ECB clearly states that its asset purchases have an
environmental impact. But, while building additional knowledge is useful
and needed to achieve a complete “greening” of the financial system,
concrete and rapid action is crucial and ample information is available to
act right now.

 

As the ECB’s asset purchases reached historical proportions amid the COVID
crisis, finance 38 fossil fuel companies – even in coal and shale oil and
gas – and could end up supporting polluters to up to 220 billion, we do
not have time to wait and the strategic review won’t produce any concrete
results before 2022.

 

In fact, to keep global warming close to 1.5°C, we need progressively
phase out fossil fuels to live in a fossil free world by 2050. More
precisely, we need to phase out coal as soon as 2030 in Europe and the
OECD and 2040 worldwide and oil and gas ten years later. These key
objectives should immediately be used to assess the impact of the ECB’s
operations and reduce it, thus aligning with European climate objectives.
As GHG emissions are concentrated in a few most polluting sectors –
including fossil fuels – these objectives would allow the ECB to swiftly
improve its carbon footprint.

 

The ECB would probably respond that “sectoral data do not capture large
differences within sectors and, most importantly, ignore any dynamics
within firms over time. An example of such shortcomings is that issuance
of green bonds is typically concentrated in sectors such as utilities,
infrastructure, transportation and construction, which based on backward
looking sectoral data, would be considered carbon intensive, despite them
financing sustainable projects.”

 

But this is not a valid argument: the reduction of GHG emissions requires
to simultaneously reduce polluting activities and scale up low-carbon
alternatives, this depends on the global policy of the company and not on
a single project. To ensure that its asset purchases are in line with the
ecological transition, the ECB needs to buy bonds from companies that
adopt plans to align on a 1.5°C trajectory. For fossil fuels, this means
adopting the previously mentioned objectives.

 

c. Regarding PEPP’s crucial place in the ECB’s response to the Covid-19

 

The ECB emphasizes that “the successful implementation of the PEPP is
critical for an effective monetary policy transmission mechanism aimed at
delivering the favourable financial conditions that are necessary to
support the economy, in view of the severe risks to the outlook for the
euro area posed by the COVID-19 pandemic”.

 

I would like to stress that the lack of climate criteria in the PEPP is
rising climate-related risks and, by refusing to fight against climate
change and protect nature, contributing to future Covid-like crisis. As
many European leaders and financial players have stated, the response to
Covid needs to be “green”. Monetary policy should not be exempted from
this green imperative. Ending the support that PEPP provides to the most
polluting companies is a logical and necessary step.

 

A full history of my request and all correspondence is available on the
Internet at this address:
https://www.asktheeu.org/en/request/disc...

 

Yours faithfully,

 

Paul Schreiber

Reclaim Finance

 

 

 

-------------------------------------------------------------------

Please use this email address for all replies to this request:

[FOI #7876 email]

 

This message and all replies from European Central Bank will be published
on the AsktheEU.org website. For more information see our dedicated page
for EU public officials at https://www.asktheeu.org/en/help/officers

 

Please note that in some cases publication of requests and responses will
be delayed.

 

-------------------------------------------------------------------

Any e-mail message from the European Central Bank (ECB) is sent in good
faith, but shall neither be binding nor construed as constituting a
commitment by the ECB except where provided for in a written agreement.
This e-mail is intended only for the use of the recipient(s) named above.
Any unauthorised disclosure, use or dissemination, either in whole or in
part, is prohibited. If you have received this e-mail in error, please
notify the sender immediately via e-mail and delete this e-mail from your
system. The ECB processes personal data in line with Regulation (EU)
2018/1725. In case of queries, please contact the ECB Data Protection
Officer ([email address]). You may also contact the European Data
Protection Supervisor.

References

Visible links
1. https://eur-lex.europa.eu/legal-content/...
2. mailto:[email address]
3. mailto:[email address]

Access to documents,

Dear Mr Schreiber,

We refer to your confirmatory application of 1 July 2020, for access to
European Central Bank (ECB) documents.

We regret to inform you that, owing to the increased workload created by a
high number of simultaneous requests for access to documents and in
accordance with article 8.2 of [1]Decision ECB/2004/3, the ECB has decided
to extend the time-limit for responding to your application by 20 working
days.

We apologise for the inconvenience this delay may cause.

Yours sincerely,

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[2][email address]

 

 

 

From: Access to documents
Sent: 25 August 2020 10:30
To: [FOI #7876 email]
Subject: RE: [EXT] Your confirmatory application for access to documents
relating to the separate bond value under CSPP and PEPP

 

Dear Mr Schreiber,

 

would like to inform you that on 25 August 2020, after having finalised
the reply to your request with in relation to documents which contain the
following information: (1) The amount and value of CSPP and PEPP assets
and purchases linked to fossil fuel companies; (2) The amount and value of
CSPP and PEPP assets and purchases linked to the companies listed on the
Global Coal Exit List; and (3) The distribution of CSPP and PEPP assets
and purchases by sector or activity, your confirmatory application of 1
July 2020 for European Central Bank (ECB) documents which contain the
separate bond value of CSPP and PEPP assets held by the ECB and the
Eurosystem has started being processed.

 

This request will be answered within 20 working days (ECB holidays
excluded) in accordance with the Decision of the European Central Bank of
4 March 2004 on public access to European Central Bank documents
(BCE/2004/3):

[3]https://eur-lex.europa.eu/legal-content/...

 

Yours sincerely,

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[4][email address]

 

 

From: Access to documents
Sent: 13 August 2020 16:45
To: [FOI #7876 email]
Cc: Access to documents
Subject: [EXT] Your confirmatory application for access to documents
relating to the separate bond value under CSPP and PEPP

 

Dear Mr Schreiber,

 

We would like to inform you that your confirmatory application of 1 July
2020 for European Central Bank (ECB) documents which contain the separate
bond value of CSPP and PEPP assets held by the ECB and the Eurosystem has
been put on hold until our reply to your request of 22 April 2020, being
processed since 30 June 2020, for access to European Central Bank (ECB)
documents related to documents which contain the following information:
(1) The amount and value of CSPP and PEPP assets and purchases linked to
fossil fuel companies; (2) The amount and value of CSPP and PEPP assets
and purchases linked to the companies listed on the Global Coal Exit List;
and (3) The distribution of CSPP and PEPP assets and purchases by sector
or activity, has been finalised.

 

Please rest assured that once the reply to your second request has been
finalised, we will start with the assessment of your confirmatory
application of 1 July 2020.

 

We thank you for your understanding and apologize for the inconvenience
this additional delay may cause.

 

Yours sincerely

 

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[5][email address]

 

From: Access to documents
Sent: 03 July 2020 17:24
To: [FOI #7876 email]
Subject: RE: [EXT] Acknowledgement of receipt of confirmatory application
- Internal review of access to documents request - Disclosure of separate
bond value under CSPP and PEPP

 

Dear Mr Schreiber,

 

Thank you for your confirmatory application of 1 July 2020, for access to
European Central Bank (ECB) documents.

In accordance with Decision ECB/2004/3 on public access to ECB documents,
as last amended, you will receive a reply within 20 working days.

 

Yours sincerely

 

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[email address]

 

 

 

________________________________________

From: Paul Schreiber

Sent: Wednesday, 01 July 2020 14:47:49 (UTC+01:00) Amsterdam, Berlin,
Bern, Rome, Stockholm, Vienna

To: [email address]

Subject: [EXT] Internal review of access to documents request - Disclosure
of separate bond value under CSPP and PEPP

 

Dear European Central Bank,

 

Please pass this on to the person who reviews confirmatory applications.

 

I am filing the following confirmatory application with regards to my
access to documents request 'Disclosure of separate bond value under CSPP
and PEPP'.

 

I am dissatisfied with the ECB's refusal (LS/PS/2020/21) to provide access
to the requested documents for the following reason.

 

I/ Basis of the ECB’s refusal to disclose the separate bond value of
assets held under CSPP and PEPP

 

a. Regarding the Second indent of Article 4(1)(a) of Decision ECB/2004/3

 

The ECB's refusal relies on the Second indent of Article 4(1)(a) of
Decision ECB/2004/3.

 

This Decision was taken at a time where environment was not one of the
ECB’s concern. As such, it grants the ECB the possibility to refuse to
disclose information when it “would undermine the protection of the public
interest” but does not account for the fact that “the protection of the
public interest” also entails the disclosure of detailed information on
the climate impact of the ECB’s operations.

 

b. Regarding the effect of the disclosure on volatility and price
discovery

 

The ECB refused the request arguing that "granting market participants
access to detailed, disaggregated information regarding the CSPP/PEPP
portfolios, could introduce undue volatility and distort price discovery
in the market while compromising the effectiveness of the intervention
measures and, potentially, their monetary policy objective".

 

I do not agree with the ECB for the following reasons:

1.      The ECB provides no credible evidence or data to justify that the
disclosure of separate bond value would “introduce undue volatility” or
“distort price discovery”.

2.      Market participants already have "detailed and disaggregated"
information on the CSPP and PEEP portfolios as the list of corporate bond
securities is already published and includes the ISIN of bonds. Yet, the
ECB does not consider that this information "introduce undue volatility
and distort price discovery".

3.      Whether information is published or not, the ECB's asset purchases
already impact "price discovery" and asset prices.

 

Moreover, the ECB indicates “that the disclosure of detailed,
disaggregated data on the securities purchased and held under the
CSPP/PEPP (such as the separate bond value of CSPP and PEPP assets held by
the Eurosystem) in a centralized and complete manner would lead market
participants to draw inferences about the Eurosystem holdings and adjust
their own behavior according to assumptions established on the basis of
the information made available”.

 

However, the ECB already discloses the list of CSPP/PEPP corporate bonds
in a “centralized and complete manner” and it is not clear that the
additional disclosure of bond value would lead market participants to
significantly modify their behavior. Furthermore, as the ECB explains in
its response, the list of corporate bond securities under CSPP/PEPP is
published on a weekly basis and not in real time. If the bond values were
to be published at the same time, they would give little usable
information to market participants.

 

Finally, when it comes to the climate impact of asset purchases, an
alternative to the disclosure of separate bond value would be for the ECB
to disclose aggregated information about the climate impact of its bond
purchases. Namely, the ECB would need to start by disclosing the
information mentioned in the request for access to document :
https://www.asktheeu.org/en/request/disc...
.

 

II/ The ECB’s commentary related to the climate impact of its purchases
and the disclosure of climate related information

 

a. Regarding the “neutrality” of asset purchases

 

The ECB writes that “the implementation of the APP and PEPP are guided by
the principle of market neutrality and does not positively or negatively
discriminate on the basis of environmental or any other criteria. In the
specific case of the CSPP and PEPP, the purchases of securities issued by
non-bank corporations reflect proportionally the market value of all
eligible bonds in terms of sectors of economic activity and rating
groups.”

 

This is not true, as the ECB’s portfolio is mainly composed of
carbon-intensive sectors and is more exposed to fossil fuels and less to
low-carbon transports than the rest of the market.

 

Furthermore, market neutrality negates the political dimension of monetary
creation and is totally anachronistic in the context of the climate
emergency. Getting on track for the COP21 climate objectives requires
institutions to redirect financial flows to support a 1.5°C trajectory.
The notion of the transition itself implies both exiting unsustainable
sectors and developing sustainable alternatives.

 

Yet, by trying to reproduce the market, the principle of market neutrality
reinforces a polluting and fossil fuel-dependent economy. This principle
is out of step with mechanisms that are currently developing to integrate
climate risks, with the NGFS, the Task Force On Financial Disclosure
(TCFD) at the European level, the Science Based Target Initiative (SBTI)
internationally, or Article 173 of the energy transition law (LTECV) in
France. Also, by allowing for carbon-intensive assets to accumulate on the
ECB’s balance, it exposes the ECB to important and unaccounted financial
risks and a breach of its fiduciary duty.

 

On the other hand, the ECB’s climate intervention is fully justified by
European law as it fulfills its complementary mandates. It would
contribute to the EU’s objectives, favor the emergence of sustainable
growth, and respect the Paris Agreement. By intervening, the ECB would
follow the EU’s key objectives and principles: It would protect Europe
from future COVID-like disasters and their unprecedented economic and
financial consequences.

 

b. Regarding the lack of “granular and forward-looking analyses of the
carbon intensity” and the shortcomings of sectoral data

 

For the ECB, “meaningful assessment of the environmental impacts of the
ECB asset purchases requires granular and forward-looking analyses of the
carbon intensity of the investments financed by the bond issuances that
benefitted from our asset purchases. This is currently not possible given
the existing data gaps.”.

 

I note that the ECB clearly states that its asset purchases have an
environmental impact. But, while building additional knowledge is useful
and needed to achieve a complete “greening” of the financial system,
concrete and rapid action is crucial and ample information is available to
act right now.

 

As the ECB’s asset purchases reached historical proportions amid the COVID
crisis, finance 38 fossil fuel companies – even in coal and shale oil and
gas – and could end up supporting polluters to up to 220 billion, we do
not have time to wait and the strategic review won’t produce any concrete
results before 2022.

 

In fact, to keep global warming close to 1.5°C, we need progressively
phase out fossil fuels to live in a fossil free world by 2050. More
precisely, we need to phase out coal as soon as 2030 in Europe and the
OECD and 2040 worldwide and oil and gas ten years later. These key
objectives should immediately be used to assess the impact of the ECB’s
operations and reduce it, thus aligning with European climate objectives.
As GHG emissions are concentrated in a few most polluting sectors –
including fossil fuels – these objectives would allow the ECB to swiftly
improve its carbon footprint.

 

The ECB would probably respond that “sectoral data do not capture large
differences within sectors and, most importantly, ignore any dynamics
within firms over time. An example of such shortcomings is that issuance
of green bonds is typically concentrated in sectors such as utilities,
infrastructure, transportation and construction, which based on backward
looking sectoral data, would be considered carbon intensive, despite them
financing sustainable projects.”

 

But this is not a valid argument: the reduction of GHG emissions requires
to simultaneously reduce polluting activities and scale up low-carbon
alternatives, this depends on the global policy of the company and not on
a single project. To ensure that its asset purchases are in line with the
ecological transition, the ECB needs to buy bonds from companies that
adopt plans to align on a 1.5°C trajectory. For fossil fuels, this means
adopting the previously mentioned objectives.

 

c. Regarding PEPP’s crucial place in the ECB’s response to the Covid-19

 

The ECB emphasizes that “the successful implementation of the PEPP is
critical for an effective monetary policy transmission mechanism aimed at
delivering the favourable financial conditions that are necessary to
support the economy, in view of the severe risks to the outlook for the
euro area posed by the COVID-19 pandemic”.

 

I would like to stress that the lack of climate criteria in the PEPP is
rising climate-related risks and, by refusing to fight against climate
change and protect nature, contributing to future Covid-like crisis. As
many European leaders and financial players have stated, the response to
Covid needs to be “green”. Monetary policy should not be exempted from
this green imperative. Ending the support that PEPP provides to the most
polluting companies is a logical and necessary step.

 

A full history of my request and all correspondence is available on the
Internet at this address:
https://www.asktheeu.org/en/request/disc...

 

Yours faithfully,

 

Paul Schreiber

Reclaim Finance

 

 

 

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Access to documents,

1 Attachment

Dear Mr Schreiber,

Please find attached the ECB’s reply to your confirmatory application of 1
July 2020 for access to ECB documents.

Further to the Executive Board’s decision in relation to your confirmatory
application, we would like to use the opportunity to provide some
additional information in relation to the lack of climate criteria in the
pandemic emergency purchase programme (PEPP) and your comments regarding
the need to keep global warming close to 1.5°C and the need to buy bonds
from companies that adopt plans to align on a 1.5°C trajectory, namely,
“we need progressively phase out fossil fuels to live in a fossil free
world by 2050. More precisely, we need to phase out coal as soon as 2030
in Europe and the OECD and 2040 worldwide and oil and gas ten years later.
These key objectives should immediately be used to assess the impact of
the ECB’s operations and reduce it, thus aligning with European climate
objectives. As GHG emissions are concentrated in a few most polluting
sectors – including fossil fuels – these objectives would allow the ECB to
swiftly improve its carbon footprint”, and “[…] the reduction of GHG
emissions requires to simultaneously reduce polluting activities and scale
up low-carbon alternatives, this depends on the global policy of the
company and not on a single project. To ensure that its asset purchases
are in line with the ecological transition, the ECB needs to buy bonds
from companies that adopt plans to align on a 1.5°C trajectory. […]”.

As explained by the President of the ECB in her reply of 19 December 2019
to a letter from Members of the European Parliament Mr Tang and Ms Gill
(see the [1]ECB’s reply to letter QZ052/2019), the ECB shares the view
that climate change is an urgent and major challenge, requiring effective
measures that disincentive carbon-intensive investments while rewarding
the adoption of more sustainable technologies and business models. This is
first and foremost a task for democratically elected governments and
public authorities, which have at their disposal targeted policy tools to
achieve objectives such as those you outline. For financial markets to
contribute to this effort while minimising distortions, sustainable
finance can play an important supporting role, but significant data gaps
remain a major obstacle. These include the unavailability so far of
harmonised, firm-level and asset-level data on carbon footprints, as well
as the absence of commonly agreed definitions of which economic activities
are, or are not, sustainable.

That said, the ECB’s ongoing strategy review will provide an opportunity
to further examine how considerations related to environmental
sustainability could be better reflected in the monetary policy framework,
including exploring the extent to which climate-related risks are
understood and priced in by market participants, how credit rating
agencies incorporate such risks into their assessments, as well as
possible adjustments to the concept of market neutrality in the presence
of market failures.

In this context, and as highlighted in the Eurosystem reply to the
European Commission’s public consultations on the Renewed Sustainable
Finance Strategy and the revision of the Non-Financial Reporting Directive
(see [2]Eurosystem reply to the European Commission’s public
consultations on the Renewed Sustainable Finance Strategy and the revision
of the Non-Financial Reporting Directive, ECB, June 2020), it is essential
that swift progress is made to close existing data gaps and to ensure that
corporate data disclosure is made more consistent and more accurate. This
is a prerequisite for conducting an accurate analysis of the possible
risks to which the ECB is exposed in the conduct of its monetary policy,
as well as for any potential adjustment within the Eurosystem’s monetary
policy implementation framework.

 

In relation to your point about your request of 23 April 2020 regarding
“access to documents which contain the following information: (1) The
amount and value of CSPP and PEPP assets and purchases linked to fossil
fuel companies; (2) The amount and value of CSPP and PEPP assets and
purchases linked to the companies listed on the Global Coal Exit List; and
(3) The distribution of CSPP and PEPP assets and purchases by sector or
activity”, we would refer you to the ECB’s reply to this request on 24
August 2020 (LS/PS/2020/36). 

We note that you made numerous comments regarding the climate emergency
and widely understood economic policy and concerning policy discussion and
decisions. As per your remarks, “[the] ECB’s portfolio is mainly composed
of carbon-intensive sectors and is more exposed to fossil fuels and less
to low-carbon transports than the rest of the market. Furthermore, market
neutrality negates the political dimension of monetary creation and is
totally anachronistic in the context of the climate emergency. […] Yet, by
trying to reproduce the market, the principle of market neutrality
reinforces a polluting and fossil fuel-dependent economy. […] Also, by
allowing for carbon-intensive assets to accumulate on the ECB’s balance,
it exposes the ECB to important and unaccounted financial risks and a
breach of its fiduciary duty […].The ECB’s climate intervention is fully
justified by European law as it fulfills its complementary mandates […]
and it would protect Europe from future COVID-like disasters and their
unprecedented economic and financial consequences”, we would note that the
Director General Secretariat’s letter of 29 June 2020 included
sufficiently specific explanations addressing these points. Furthermore,
we would again point out that the eligibility criteria for the asset
purchase programmes (APP) and PEPP are deliberately broad in order to
provide a large range of purchasable securities. This makes the programmes
more effective and helps mitigate distortions in specific market segments.

The implementation of the APP and PEPP are guided by the principle of
market neutrality and does not positively or negatively discriminate on
the basis of environmental or any other criteria (see also Question 2.4 in
the [3]Corporate sector purchase programme (CSPP) Q&A). In the specific
case of the corporate sector purchase programme (CSPP) and PEPP, the
purchases of securities issued by non-bank corporations proportionally
reflect the market value of all eligible bonds in terms of sectors of
economic activity and rating groups. Under this premise, the ECB has also
purchased green bonds (bonds whose proceeds are used to finance projects
with an environmental benefit) under both programmes (purchases of green
bonds under the Eurosystem’s APP have been illustrated in more detail the
box entitled “[4]Purchases of green bonds under the Eurosystem’s asset
purchase programme”, Economic Bulletin, Issue 7, ECB, 2018, pp. 21-26. The
analysis showed that under the CSPP the Eurosystem held close to 20% of
the CSPP-eligible green corporate bond universe and that Eurosystem
purchases have reduced the yields of green bonds while supporting their
issuance by non-financial corporations. Please also see “[5]Never waste a
crisis: COVID-19, climate change and monetary policy”, speech by Isabel
Schnabel, member of the Executive Board of the ECB, at a virtual
roundtable on “Sustainable Crisis Responses in Europe” organised by the
INSPIRE research network, 17 July 2020: “As part of the corporate sector
purchase programme (CSPP) and the pandemic emergency purchase programme
(PEPP), the Eurosystem is buying eligible green bonds. We are currently
holding around 20% of the eligible green corporate bond universe. But the
green universe only comprises a small fraction of the overall universe. As
this market segment grows and develops, the Eurosystem will automatically
purchase more green bonds.”). Yet, as explained by ECB Executive Board
member Isabel Schnabel in her speech at the European Sustainable Finance
Summit on 28 September 2020, the strategy review will provide an
opportunity to consider whether, in the presence of market failures,
market neutrality constitutes the appropriate benchmark for a central bank
when the market itself is not achieving efficient outcomes (see “[6]When
markets fail – the need for collective action in tackling climate change”,
speech by Isabel Schnabel at the European Sustainable Finance Summit,
Frankfurt am Main, 28 September 2020).

 

Furthermore, we would like to reiterate that the quantification of the
total value of carbon-related assets would require a link to be
established between the bonds purchased by the ECB and the
carbon-intensity of the investments financed with the proceeds of such
bond issuances. As explained on 25 September 2020 in the ECB President’s
reply to several MEPs, other than in specific cases where the use of
proceeds is specified (as for instance in the case of green bonds),
eligible debt securities usually provide funding for general purposes and
are not earmarked to finance individual assets or lines of business (see
the [7]ECB’s reply to letter QZ-040/2020). Consequently, in the absence of
appropriate data, determining a possible environmental impact of the CSPP
and PEPP based on backward-looking sectoral or firm-level data can be
misleading (see the [8]ECB’s reply to letter QZ-052/2019). As explained by
the ECB President on 8 June 2020 at her regular hearing before the ECON
Committee of the European Parliament, a meaningful assessment of the
environmental impacts of the ECB’s asset purchases requires granular and
forward-looking analyses of the carbon intensity of the investments
financed by the bond issuances that benefitted from our asset purchases.
This is currently not possible given the existing data gaps. In this
context, it is worth pointing out that the ECB has recently highlighted
the current shortcomings of corporate disclosure of environmental and
climate-related information in the EU and emphasized the urgency of
addressing the above-mentioned data gaps in its reply to the European
Commission’s public consultations on sustainable finance (see
[9]Eurosystem reply to the European Commission’s public consultations on
the Renewed Sustainable Finance Strategy and the revision of the
Non-Financial Reporting Directive, ECB, 2020).

 

As further explained in the special feature of the ECB’s Financial
Stability Review of May 2019 (see Giuzio, M., Krušec, D., Levels, A.,
Melo, A. S., Mikkonen, K. and Radulova, P., “Climate change and financial
stability”, [10]Financial Stability Review, ECB, May 2019), sectoral data
do not capture large differences within sectors and, most importantly,
ignore any dynamics within firms over time. For example, the issuance of
green bonds is typically concentrated in sectors such as utilities,
infrastructure, transportation and construction, which, based on
backward-looking sectoral data, would be considered carbon intensive,
despite the fact that these are debt securities whose proceeds are
earmarked to finance sustainable projects. Similarly, companies active in
sectors that, based on aggregate information, are assessed as highly
polluting could also use the proceeds of a bond issuance eligible for ECB
asset purchase to finance the adoption of more energy-efficient
technologies, reduce carbon emissions and reorient business models towards
sustainable economic activities. This highlights the importance of
targeted policy measures that create a dynamic incentive to reduce carbon
emissions.

 

Finally, we would like to add that, as explained by ECB Executive Board
member Isabel Schnabel on 28 September 2020 at the European Sustainable
Finance Summit (“[11]When markets fail – the need for collective action in
tackling climate change”, speech by Isabel Schnabel at the European
Sustainable Finance Summit, Frankfurt am Main, 28 September 2020), the ECB
is investigating whether and how the ECB’s monetary policy operations and
portfolios could be adjusted to reflect the fact that climate change, if
not addressed swiftly, may affect the economy in ways that pose
potentially material risks to price stability in the medium to long term.
Moreover, an important first step in contributing to correcting prevailing
market failures is to improve disclosure requirements and reduce
informational inefficiencies. The ECB is actively engaged in this
endeavor. The Governing Council will discuss these and other options as
part of the monetary policy strategy review. Additionally, you have the
possibility to make a contribution via the [12]ECB’s Listen Portal until
end of October 2020.

Yours sincerely,

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[13][email address]

 

 

 

From: Access to documents
Sent: 22 September 2020 11:13
To: '[FOI #7876 email]'
Subject: RE: [EXT] Extension of deadine for reply to your confirmatory
application for access to documents relating to the separate bond value
under CSPP and PEPP

 

Dear Mr Schreiber,

We refer to your confirmatory application of 1 July 2020, for access to
European Central Bank (ECB) documents.

We regret to inform you that, owing to the increased workload created by a
high number of simultaneous requests for access to documents and in
accordance with article 8.2 of [14]Decision ECB/2004/3, the ECB has
decided to extend the time-limit for responding to your application by 20
working days.

We apologise for the inconvenience this delay may cause.

Yours sincerely,

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[15][email address]

 

 

 

From: Access to documents
Sent: 25 August 2020 10:30
To: [FOI #7876 email]
Subject: RE: [EXT] Your confirmatory application for access to documents
relating to the separate bond value under CSPP and PEPP

 

Dear Mr Schreiber,

 

would like to inform you that on 25 August 2020, after having finalised
the reply to your request with in relation to documents which contain the
following information: (1) The amount and value of CSPP and PEPP assets
and purchases linked to fossil fuel companies; (2) The amount and value of
CSPP and PEPP assets and purchases linked to the companies listed on the
Global Coal Exit List; and (3) The distribution of CSPP and PEPP assets
and purchases by sector or activity, your confirmatory application of 1
July 2020 for European Central Bank (ECB) documents which contain the
separate bond value of CSPP and PEPP assets held by the ECB and the
Eurosystem has started being processed.

 

This request will be answered within 20 working days (ECB holidays
excluded) in accordance with the Decision of the European Central Bank of
4 March 2004 on public access to European Central Bank documents
(BCE/2004/3):

[16]https://eur-lex.europa.eu/legal-content/...

 

Yours sincerely,

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[17][email address]

 

 

From: Access to documents
Sent: 13 August 2020 16:45
To: [FOI #7876 email]
Cc: Access to documents
Subject: [EXT] Your confirmatory application for access to documents
relating to the separate bond value under CSPP and PEPP

 

Dear Mr Schreiber,

 

We would like to inform you that your confirmatory application of 1 July
2020 for European Central Bank (ECB) documents which contain the separate
bond value of CSPP and PEPP assets held by the ECB and the Eurosystem has
been put on hold until our reply to your request of 22 April 2020, being
processed since 30 June 2020, for access to European Central Bank (ECB)
documents related to documents which contain the following information:
(1) The amount and value of CSPP and PEPP assets and purchases linked to
fossil fuel companies; (2) The amount and value of CSPP and PEPP assets
and purchases linked to the companies listed on the Global Coal Exit List;
and (3) The distribution of CSPP and PEPP assets and purchases by sector
or activity, has been finalised.

 

Please rest assured that once the reply to your second request has been
finalised, we will start with the assessment of your confirmatory
application of 1 July 2020.

 

We thank you for your understanding and apologize for the inconvenience
this additional delay may cause.

 

Yours sincerely

 

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[18][email address]

 

From: Access to documents
Sent: 03 July 2020 17:24
To: [FOI #7876 email]
Subject: RE: [EXT] Acknowledgement of receipt of confirmatory application
- Internal review of access to documents request - Disclosure of separate
bond value under CSPP and PEPP

 

Dear Mr Schreiber,

 

Thank you for your confirmatory application of 1 July 2020, for access to
European Central Bank (ECB) documents.

In accordance with Decision ECB/2004/3 on public access to ECB documents,
as last amended, you will receive a reply within 20 working days.

 

Yours sincerely

 

Compliance and Governance Office

DG Secretariat

European Central Bank

Sonnemannstrasse 20

60314 Frankfurt am Main

[email address]

 

 

 

________________________________________

From: Paul Schreiber

Sent: Wednesday, 01 July 2020 14:47:49 (UTC+01:00) Amsterdam, Berlin,
Bern, Rome, Stockholm, Vienna

To: [email address]

Subject: [EXT] Internal review of access to documents request - Disclosure
of separate bond value under CSPP and PEPP

 

Dear European Central Bank,

 

Please pass this on to the person who reviews confirmatory applications.

 

I am filing the following confirmatory application with regards to my
access to documents request 'Disclosure of separate bond value under CSPP
and PEPP'.

 

I am dissatisfied with the ECB's refusal (LS/PS/2020/21) to provide access
to the requested documents for the following reason.

 

I/ Basis of the ECB’s refusal to disclose the separate bond value of
assets held under CSPP and PEPP

 

a. Regarding the Second indent of Article 4(1)(a) of Decision ECB/2004/3

 

The ECB's refusal relies on the Second indent of Article 4(1)(a) of
Decision ECB/2004/3.

 

This Decision was taken at a time where environment was not one of the
ECB’s concern. As such, it grants the ECB the possibility to refuse to
disclose information when it “would undermine the protection of the public
interest” but does not account for the fact that “the protection of the
public interest” also entails the disclosure of detailed information on
the climate impact of the ECB’s operations.

 

b. Regarding the effect of the disclosure on volatility and price
discovery

 

The ECB refused the request arguing that "granting market participants
access to detailed, disaggregated information regarding the CSPP/PEPP
portfolios, could introduce undue volatility and distort price discovery
in the market while compromising the effectiveness of the intervention
measures and, potentially, their monetary policy objective".

 

I do not agree with the ECB for the following reasons:

1.      The ECB provides no credible evidence or data to justify that the
disclosure of separate bond value would “introduce undue volatility” or
“distort price discovery”.

2.      Market participants already have "detailed and disaggregated"
information on the CSPP and PEEP portfolios as the list of corporate bond
securities is already published and includes the ISIN of bonds. Yet, the
ECB does not consider that this information "introduce undue volatility
and distort price discovery".

3.      Whether information is published or not, the ECB's asset purchases
already impact "price discovery" and asset prices.

 

Moreover, the ECB indicates “that the disclosure of detailed,
disaggregated data on the securities purchased and held under the
CSPP/PEPP (such as the separate bond value of CSPP and PEPP assets held by
the Eurosystem) in a centralized and complete manner would lead market
participants to draw inferences about the Eurosystem holdings and adjust
their own behavior according to assumptions established on the basis of
the information made available”.

 

However, the ECB already discloses the list of CSPP/PEPP corporate bonds
in a “centralized and complete manner” and it is not clear that the
additional disclosure of bond value would lead market participants to
significantly modify their behavior. Furthermore, as the ECB explains in
its response, the list of corporate bond securities under CSPP/PEPP is
published on a weekly basis and not in real time. If the bond values were
to be published at the same time, they would give little usable
information to market participants.

 

Finally, when it comes to the climate impact of asset purchases, an
alternative to the disclosure of separate bond value would be for the ECB
to disclose aggregated information about the climate impact of its bond
purchases. Namely, the ECB would need to start by disclosing the
information mentioned in the request for access to document :
https://www.asktheeu.org/en/request/disc...
.

 

II/ The ECB’s commentary related to the climate impact of its purchases
and the disclosure of climate related information

 

a. Regarding the “neutrality” of asset purchases

 

The ECB writes that “the implementation of the APP and PEPP are guided by
the principle of market neutrality and does not positively or negatively
discriminate on the basis of environmental or any other criteria. In the
specific case of the CSPP and PEPP, the purchases of securities issued by
non-bank corporations reflect proportionally the market value of all
eligible bonds in terms of sectors of economic activity and rating
groups.”

 

This is not true, as the ECB’s portfolio is mainly composed of
carbon-intensive sectors and is more exposed to fossil fuels and less to
low-carbon transports than the rest of the market.

 

Furthermore, market neutrality negates the political dimension of monetary
creation and is totally anachronistic in the context of the climate
emergency. Getting on track for the COP21 climate objectives requires
institutions to redirect financial flows to support a 1.5°C trajectory.
The notion of the transition itself implies both exiting unsustainable
sectors and developing sustainable alternatives.

 

Yet, by trying to reproduce the market, the principle of market neutrality
reinforces a polluting and fossil fuel-dependent economy. This principle
is out of step with mechanisms that are currently developing to integrate
climate risks, with the NGFS, the Task Force On Financial Disclosure
(TCFD) at the European level, the Science Based Target Initiative (SBTI)
internationally, or Article 173 of the energy transition law (LTECV) in
France. Also, by allowing for carbon-intensive assets to accumulate on the
ECB’s balance, it exposes the ECB to important and unaccounted financial
risks and a breach of its fiduciary duty.

 

On the other hand, the ECB’s climate intervention is fully justified by
European law as it fulfills its complementary mandates. It would
contribute to the EU’s objectives, favor the emergence of sustainable
growth, and respect the Paris Agreement. By intervening, the ECB would
follow the EU’s key objectives and principles: It would protect Europe
from future COVID-like disasters and their unprecedented economic and
financial consequences.

 

b. Regarding the lack of “granular and forward-looking analyses of the
carbon intensity” and the shortcomings of sectoral data

 

For the ECB, “meaningful assessment of the environmental impacts of the
ECB asset purchases requires granular and forward-looking analyses of the
carbon intensity of the investments financed by the bond issuances that
benefitted from our asset purchases. This is currently not possible given
the existing data gaps.”.

 

I note that the ECB clearly states that its asset purchases have an
environmental impact. But, while building additional knowledge is useful
and needed to achieve a complete “greening” of the financial system,
concrete and rapid action is crucial and ample information is available to
act right now.

 

As the ECB’s asset purchases reached historical proportions amid the COVID
crisis, finance 38 fossil fuel companies – even in coal and shale oil and
gas – and could end up supporting polluters to up to 220 billion, we do
not have time to wait and the strategic review won’t produce any concrete
results before 2022.

 

In fact, to keep global warming close to 1.5°C, we need progressively
phase out fossil fuels to live in a fossil free world by 2050. More
precisely, we need to phase out coal as soon as 2030 in Europe and the
OECD and 2040 worldwide and oil and gas ten years later. These key
objectives should immediately be used to assess the impact of the ECB’s
operations and reduce it, thus aligning with European climate objectives.
As GHG emissions are concentrated in a few most polluting sectors –
including fossil fuels – these objectives would allow the ECB to swiftly
improve its carbon footprint.

 

The ECB would probably respond that “sectoral data do not capture large
differences within sectors and, most importantly, ignore any dynamics
within firms over time. An example of such shortcomings is that issuance
of green bonds is typically concentrated in sectors such as utilities,
infrastructure, transportation and construction, which based on backward
looking sectoral data, would be considered carbon intensive, despite them
financing sustainable projects.”

 

But this is not a valid argument: the reduction of GHG emissions requires
to simultaneously reduce polluting activities and scale up low-carbon
alternatives, this depends on the global policy of the company and not on
a single project. To ensure that its asset purchases are in line with the
ecological transition, the ECB needs to buy bonds from companies that
adopt plans to align on a 1.5°C trajectory. For fossil fuels, this means
adopting the previously mentioned objectives.

 

c. Regarding PEPP’s crucial place in the ECB’s response to the Covid-19

 

The ECB emphasizes that “the successful implementation of the PEPP is
critical for an effective monetary policy transmission mechanism aimed at
delivering the favourable financial conditions that are necessary to
support the economy, in view of the severe risks to the outlook for the
euro area posed by the COVID-19 pandemic”.

 

I would like to stress that the lack of climate criteria in the PEPP is
rising climate-related risks and, by refusing to fight against climate
change and protect nature, contributing to future Covid-like crisis. As
many European leaders and financial players have stated, the response to
Covid needs to be “green”. Monetary policy should not be exempted from
this green imperative. Ending the support that PEPP provides to the most
polluting companies is a logical and necessary step.

 

A full history of my request and all correspondence is available on the
Internet at this address:
https://www.asktheeu.org/en/request/disc...

 

Yours faithfully,

 

Paul Schreiber

Reclaim Finance

 

 

 

-------------------------------------------------------------------

Please use this email address for all replies to this request:

[FOI #7876 email]

 

This message and all replies from European Central Bank will be published
on the AsktheEU.org website. For more information see our dedicated page
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Dear DG Secretariat of the European Central Bank,

Thank you for your response and the additional elements you provided.

Yours sincerely,

Paul Schreiber

Reclaim Finance