Centre for Sustainable Finance & Department of Economics

Climate change and central bank asset purchases

Project Information

Principal Investigator


  • Daniela Gabor (University of the West of England)
  • Maria Nikolaidi (University of Greenwich)
  • Frank van Lerven (New Economics Foundation)



  • 2020–2021


As part of their corporate quantitative easing (QE) programmes, the Bank of England (BoE) and the European Central Bank (ECB) have purchased a large amount of corporate bonds issued by companies with a high climate footprint.

This has raised concerns over the adverse climate impact of these asset purchase programmes which stems from the non-consideration of climate issues in the process through which eligible corporate securities for purchases are identified. Instead, it has been argued that QE programmes need to be recalibrated so that a higher amount of climate-aligned bonds are purchased instead of carbon-intensive ones. In so doing, the ECB and the BoE can contribute to the fight against climate change and address the carbon bias hardwired into their holdings.

This project provides the first integrated analysis of how the corporate bond holdings of the BoE and the ECB can become climate-aligned. It develops several backward-looking and forward-looking indicators that are used to capture the climate footprint of bonds.  Using these indicators, the project assesses the attempts of the BoE and the ECB to decarbonise their corporate bond portfolios and analyses alternative options that move explicitly beyond market neutrality and are more ambitious from a climate neutrality perspective.