ECB's asset purchases linked to fossil fuel

The European Central Bank (ECB) is facing accusations that its financial policies are supporting fossil fuel companies whose operations threaten vital ecosystems. A new report from the non-profit Reclaim Finance claims the bank's asset purchases and collateral framework may be inadvertently financing environmental damage in biodiversity hotspots.

According to research by the Better Planet Laboratory cited in the report, fossil fuel infrastructure is heavily concentrated in these sensitive areas. Almost one-third of existing EU fossil fuel facilities are located in regions considered important for biodiversity. The figure for planned facilities is even higher, exceeding two-thirds.

The Reclaim Finance analysis used this data to identify 80 companies whose fossil fuel activities pose major threats to ecosystems. The report then scrutinized the ECB's corporate asset purchase programmes.

ECB Asset Purchases Under Scrutiny

The investigation found that between 2016 and 2024, the ECB bought assets issued by at least 15 of the identified high-risk companies. By May 2026, securities from these firms accounted for nearly one-tenth of the assets held in the ECB's corporate monetary portfolios. This suggests a direct financial link between the central bank's policy operations and companies active in biodiversity-critical zones.

The criticism extends beyond direct purchases to the bank's collateral framework. This system allows commercial banks to pledge certain assets when borrowing from the ECB. The report states that assets issued by companies with fossil fuel projects in critical biodiversity areas are eligible for this purpose.

Over the 18-month period analyzed, banks were able to pledge assets from at least 20 such companies. In May 2026, those companies represented roughly one-tenth of eligible assets issued by non-financial corporations and certain financial corporations. The report argues this increases the utility and value of these companies' assets to banks and investors.

Bank Financing and Supervisory Gaps

The report also examined whether ECB supervision has curbed bank lending to these firms. It found that 33 major banks supervised by the ECB provided $161 billion in financing between 2021 and 2025. This funding went to 45 companies with fossil fuel facilities located in areas critical for biodiversity.

These findings emerge despite the ECB stating that European banks are progressing in integrating climate and nature-related risks into their risk management. Reclaim Finance contends there is a significant gap. The report argues that assessing financial risks without addressing the underlying activities driving environmental damage is insufficient.

"Assessing those risks without addressing the activities driving environmental damage leaves a gap," the report states, between the ECB's stated approach and its actual policies.

Calls for Policy Exclusion

In response to its findings, the report makes several recommendations. It urges the ECB to identify companies whose fossil fuel operations pose significant threats to critical ecosystems. The central bank should then prevent their assets from benefiting from its monetary policy operations.

The non-profit calls for companies linked to fossil fuel activities in critical biodiversity areas to be excluded from the ECB's corporate monetary portfolios and collateral framework. It also recommends the ECB use its supervisory powers more forcefully to discourage banks from financing those specific activities. The report frames this as a necessary step to align the bank's monetary and supervisory policies with its own recognition of nature-related financial risks.