In the absence of conflict[1], the European Central Bank (hereafter ECB) must honour the primary objective of the monetary policy of the Union, namely to maintain price stability (Articles 119(2), 127(1) and 282(2) TFEU), as well as its secondary objectives, namely to support the general economic policies in the Union with a view to contributing to the achievement of “the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment” (Article 3(3) TEU). While performing its tasks, the ECB must attend to Article 11 TFEU, which calls for the integration of environmental protection requirements into the definition and implementation of the Union's policies and activities, in particular with a view to promoting sustainable development, and, as “horizontal” clause, applies to all policies of the Union, including the monetary policy, and is binding on all relevant EU institutions, including the ECB[2]. Article 3 TEU and Article 11 TFEU incorporate environmental policy objectives into the mandate of the ECB and the national central banks comprised in the Eurosystem, thereby giving them the power to contribute to environmental protection.
The paper addresses the extension of this power, discussing the hierarchy of environmental protection vis à vis other goals mentioned in Article 3 TEU as well as vis à vis the ECB democratic legitimacy, independence and credibility. My contribution adds to the literature by fine tuning the legal criterion used to determine to what extent environmental objectives fall within the ECB mandate, with resource to the principle of sustainable development and the principal-agent theory. I argue that some cases where the decision of the ECB to prioritise environmental goals among its secondary objectives is usually considered as a political decision are more correctly assessed as an application of the principle of sustainable development. Moreover, my argument goes, in several other cases where a prioritisation of environmental goals among the ones mentioned in Article 3(3) TEU in fact needs to occur for the ECB to address climate change such prioritization might be democratically legitimized by the past communication of the European Parliament (hereafter also EP). Following the signalisation of a hierarchy among its secondary objectives by the EP, the ECB might determinate its secondary mandate, adopting in its strategy review the hierarchy signalled by the EP as operating rule, like in 1998 it defined what price stability is by spelling out the 2% rule[3]. Hence, the space of manoeuvre the ECB currently enjoys to pursue environmental protection within its mandate is significantly vast.
At her confirmation hearing before the European Parliament (4th September 2019), Christine Lagarde has pledged to ensure that all institutions, including the ECB, “have climate change risk and protection of the environment at the core of their understanding of their mission. (..) Primary mandate is price stability, of course. But it has to be embedded that climate change and environmental risk are mission-critical””[4] and should hence be seen as a priority[5]. Article 3 TEU includes environmental protection as one of several aims of the Union and a priori these goals are at the same level of normative priority[6]. Benoît Cœuré highlighted that it is not for the ECB itself to prioritize its secondary objectives as “[s]etting priorities among different objectives, this is the definition of politics […] and this is what parliaments do”, or, in other words, it is up to European political institutions to clarify the secondary priorities of the ECB (outside of price stability), in order for the central bank to get the full political legitimacy to act on this field[7].
I challenge a common broad stance in this matter[8] and argue that, by making use of the concept of sustainable development, the space, where addressing environmental goals in monetary policy indeed requires a political decision of the ECB entailing a prioritisation of environmental goals above other secondary objectives, is smaller than usually claimed. For example, the ECB´s decision to reduce the carbon content of its corporate sector purchase programme (hereafter CSPP) does not entail a political decision once one refocus the debate on the principle of sustainable development, since the core idea of this principle is that environmental protection, economic growth and social development are mutually compatible, rather than conflicting, objectives[9], and the ECB bias in favour of heavy carbon emitters[10] is not accurately reflected in public goods, as these sectors are still over-represented in the ECB purchases when compared to their contribution to employment and economic activity[11]. An important consequence of this approach is that ECB decisions taken following the application of the principle of sustainable development would be able to satisfy even the most rigorous national scrutiny performed by national constitutional courts, as the German Constitutional Court (Bundesverfassungsgericht), which requires the formal intervention of the German parliament (Bundestag) for any expansion of the ECB mandate[12].
But the principle of sustainable development is not always sufficient to underpin the greening of the ECB´s action without raising issues of democratic legitimacy, since Article 11 TFUE does not impose an absolute priority of environmental protection over other specific objectives found in Article 3 TEU[13]. In several cases, supporting the climate transition might require a prioritisation between ECB´s secondary objectives. Following the application of the principal-agent theory, I argue, adding to the literature discussing the gaps in the central bank mandate to address choices entailing non-purely technical matters[14], that the ECB should be considered democratically legitimised to perform the mentioned prioritisation when such hierarchy was previously signalled by the European Parliament with reference to monetary policy and the result of the decision does not conflict with its primary objective. To assess whether this occurred, all the relevant communication of the EP along a reasonable period of time needs to be analysed. Though, the literature highlights episodes where the EP underpinned the importance of having the ECB addressing climate change[15], it does not specifically assess whether such EP communication can be classified as an authorization to prioritise environmental concerns among other ECB´s secondary objectives.
Once such prioritisation is confirmed, my argument goes, some consequences with regard to the application of Article 11 TFEU by the Court of Justice of the European Union (hereafter CJEU) will emerge. For example, while in the absence of the named prioritisation the CJEU is expected to use a rather lenient standard of compliance with the procedural obligation established in Article 11 TFEU, using this norm as standard for reviewing the validity of ECB decisions only where ecological interests manifestly have not been taken into account or where they have been completely disregarded[16], because when EU institutions exercise their discretion in policy areas involving complex assessments, like in monetary policy, the CJEU has tended to regard the principle of proportionality as a rather lenient limit to such political discretion[17]; once the named prioritisation takes place, the Court is expected to adopt a more demanding standard of compliance, requiring the ECB to fully explains why, in the use of its discretion, it did not prioritise environmental objectives when the latter were compatible with its primary objective. Moreover, while in the absence of the named prioritisation, a principle of non-discrimination would be a relevant limit to the exercise of the ECB´s political discretion if, for example, the CSPP Decision excluded polluting issuers from the eligibility criteria, once environmental concerns are prioritised such an exclusion would be justified.
[1] Court of Justice of the European Union, Case C-493/17, Weiss and Others, ECLI:EU:C:2018:1000, paragraph 60.
[2] E. Cerrato, F. Agostini and N. Jaberg, “Why the PSPP judgment of the German Federal Constitutional Court gives the ECB another incentive to integrate climate change considerations into monetary policy”, available online: Why the PSPP judgment of the German Federal Constitutional Court gives the ECB another incentive to integrate climate change considerations into monetary policy – European Law Blog [Last accessed 3 Fev 2021]; Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018.
[3] ECB, “The outcome of the ECB’s evaluation of its monetary policy strategy”, Monthly Bulletin (2003), 79–92.
[4] Positive Money Europe, “What can we hope from Christine Lagarde as ECB President?”, 7 September 2019, available online: https://www.positivemoney.eu/2019/09/lagarde-ecb-president/ [Last accessed 13 Nov 2020].
[5] European Parliament (Committee on Economic and Monetary Affairs), Draft Report on the Council recommendation on the appointment of the President of the European Central Bank (C9-0048/2019 – 2019/0810(NLE)), 29 August 2019.
[6] Martin Wasmeier, ‘Integration of Environmental Protection as a General Rule for Interpreting Community Law, Common market law review, Vol. 38, N. 1, 2001, 159-177, 163.
[7] Wojtek Kalinowski, Nicolas Hercelin and Stanislas Jourdan,“Benoît Coeuré explique à l’Assemblée nationale comment la BCE peut agir pour le climat”, Veblen Institute for Economic Reforms, 23 May 2019, available online: https://www.veblen-institute.org/Benoit-Coeure-explique-a-l-Assemblee-nationale-comment-la-BCE-peut-agir-pour-le.html [Last accessed 13 Nov 2019].
[8] Nik de Boer and Jens van ’t Klooster, “The ECB, the courts and the issue of democratic legitimacy after Weiss”, Preprint and unedited version of the article forthcoming in the Common Market Law Review, volume 57 issue 6, 2020, available online: The ECB, the Courts and the Issue of Democratic Legitimacy After Weiss by Nik de Boer, Jens van 't Klooster :: SSRN [Last accessed 6 Feb 2021].
[9] Andrea Lenschow, “Greening the European Union: An Introduction”, in Andrea Lenschow (ed), Environmental policy integration: Greening sectoral policies in Europe, Earthscan 2002, 3-21, 5. See also Beate Sjåfjell, “The Legal Significance of Article 11 TFEU for EU Institutions and Member States”, in Beate Sjåfjell and Anja Wiesbrock (eds), The greening of European business under EU law: taking article 11 TFEU seriously, Paperback edition, Routledge, 2017, 51-72, 55.
[10] See for example Lisa Hanzl, Oliver Picek und Joel Tölgyes, “Wie „grün“ sind die EZB-Käufe österreichischer Unternehmensanleihen?”, Momentum Institut, Policy Brief 23/2020, December 2020, available online: pb_23.2020_1217_greenmonetarypolicy_0.pdf (momentum-institut.at) [Last accessed 6 Feb 2021]; Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 2020, 865-879, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021]; Yannis Dafermos, Daniela Gabor, Maria Nikolaidi, Adam Pawloff and Frank van Lerven; Decarbonising is easy. Beyond market neutrality in the ECB's corporate QE, Greenpeace, New Economics Foundation (NEF), SOAS University of London, University of the West of England and University of Greenwich, 20 October 2020; Patrick Honohan, "Should Monetary Policy Take Inequality and Climate Change into Account?”, Peterson Institute for International Economics Working Paper 19-18, October 2019; Stanislas Jourdan and Wojtek Kalinowski, Aligning Monetary Policy with the EU’s Climate Targets, Report from Veblen Institute for Economic Reforms and Positive Money Europe, April 2019, p. 3; Sini Matikainen, Emanuele Campiglio and Dimitri Zenghelis, ‘The Climate Impact of Quantitative Easing’, Grantham Research Institute on Climate Change and the Environment and Centre for Climate Change Economics and Policy (CCCEP) Policy Paper, May 2017; Corporate Europe Observatory, “The ECB’s ‘quantitative easing’ funds multinationals and climate change”, Corporate Europe Observatory [website], 12 December 2016, available online: The ECB’s ‘quantitative easing’ funds multinationals and climate change | Corporate Europe Observatory [Last accessed 6 Feb 2021]. Federica Agostini et al, “EU Treaties require Eurozone monetary policy to take environmental objectives into account”, FSJ Project Policy Brief 1/2020, May 2020, University of Glasgow, available online: Media_723215_smxx.pdf (gla.ac.uk) [Last accessed 6 Feb 2021]).
[11] Yannis Dafermos, Daniela Gabor, Maria Nikolaidi, Adam Pawloff, Frank van Lerven, “Decarbonising is easy. Beyond market neutrality in the ECB's corporate QE”, Greenpeace, New Economics Foundation, SOAS University of London, University of the West of England and University of Greenwich, 20 October 2020.
[12] See, for example, 2 BvR 2134, 2 BvR 2159/92, Maastricht, BverfGE 89, 155, Judgment of 12 October 1993; Second Senate of 14 January 2014 - 2 BvR 2728/13 -, paragraphs 1-24, available online: http://www.bverfg.de/e/rs20140114_2bvr272813en.html [Last accessed 6 Feb 2021], paragraphs 39-40 and 63-68; BVerfG, Order of the Second Senate of 18 July 2017 - 2 BvR 859/15 -, paragraphs 1-137, available online: http://www.bverfg.de/e/rs20170718_2bvr085915en.html [Last accessed 6 Feb 2021], paragraphs 65, 102-103; 142, 158-160.
[13] Case C-405/92 Mondiet, ECLI:EU:C:1993:906, paragraph 26. Case 336/00 Huber, EU:C:2002:509, paragraph 33. Case C-62/88 Greece v Council, EU:C:1990:153, paragraphs 19 and 20. Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018.
[14] See, for example, Nik de Boer and Jens van ’t Klooster, “The ECB, the courts and the issue of democratic legitimacy after Weiss”, Preprint and unedited version of the article forthcoming in the Common Market Law Review, volume 57 issue 6, 2020, available online: The ECB, the Courts and the Issue of Democratic Legitimacy After Weiss by Nik de Boer, Jens van 't Klooster :: SSRN [Last accessed 6 Feb 2021]; Jens van ’t Klooster, “The Ethics of Delegating Monetary Policy”, Journal of Politics, Vol. 82, 2020, 587–599; Chiara Zilioli, “Standard of review of central bank decisions: an introduction”, in ECB Legal Conference 2019, 2019, 23–27; Fromage et al., “ECB independence and accountability today: Towards a (necessary) redefinition?”, Maastricht Journal of European and Comparative Law, Vol. 26, 2019, 3–16; Vestert Borger, “Central Bank Independence, Discretion, and Judicial Review”, in Joana Mendes (Ed.), EU Executive Discretion and the Limits of Law, Oxford University Press, 2019, 118–131; Hanns Peter Nehl, “Judicial Review of Complex Socio-Economic, Technical, and Scientific Assessment in the European Union”, in Joana Mendes (Ed.), EU Executive Discretion and the Limits of Law, Oxford University Press, 2019, 157–197; Rene Smits, “Accountability of the European Central Bank”, Ars Aequi (2019), 27–37; Kenneth Rogoff, “Is This the Beginning of the End of Central Bank Independence?”, G30 Occasional Paper, 2019, available online: Is This the Beginning of the End of Central Bank Independence? | Kenneth Rogoff (harvard.edu) [Last accessed 6 Feb 2021]; Jens van ’T Klooster, “Central Banking in Rawls’s Property-Owning Democracy”, Political Theory, Vol. 47, N. 5, 674-698, 2019, available online: Jens van ’T. Klooster, Central Banking in Rawls’s Property-Owning Democracy - PhilPapers [Last accessed 6 Feb 2021]; Clément Fontan, Emmanuel Carré and Guillaume L`Oeillet, “Theoretical perspectives on the new era of central banking”, Fr Polit, Vol. 16, 2018, 453–470, available online: https://doi.org/10.1057/s41253-018-0067-8 [Last accessed 6 Feb 2021]; Jens van't Klooster, “Democracy and the European Central Bank's Emergency Powers”, Midwest Studies in Philosophy, Vol. 42, N. 1, 2018, 270-293; Tucker, Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State, Harvard University Press, 2018; Andrej Lang, “Ultra vires review of the ECB’s policy of quantitative easing: An analysis of the German Constitutional Court’s preliminary reference order in the PSPP case”, Common Market Law Review, Vol. 55, 2018, 923–952; Antti Ronkainen and Ville-Pekka Sorsa, “Quantitative Easing Forever? Financialisation and the Institutional Legitimacy of the Federal Reserve’s Unconventional Monetary Policy”, New Political Economy, Vol. 23, N. 6, 2018, 711-727, available online: https://doi.org/10.1080/13563467.2018.1384455 [Last accessed 6 Feb 2021]; Armin Steinbach, “All’s well that ends well? Crisis policy after the German constitutional court’s ruling in Gauweiler”, Maastricht Journal of European and Comparative Law, Vol. 24, 2017, 140–149; Deirdre Curtin, “’Accountable Independence’ of the European Central Bank: Seeing the Logics of Transparency”, European Law Journal, Vol. 23, 2017, 28–44; United Nations, “On the Role of Central Banks in Enhancing Green Finance”, United Nations Environment Programme, Inquiry Working Paper 17/01, February 2017; E. Balls, James Howat and Anna Stansbury, “Central Bank Independence Revisited: After the Financial Crisis, What Should a Model Central Bank Look Like?”, M-RCBG Associate Working Paper 67, Harvard Kennedy School, November 2016; Marco Lamandini, David Ramos and Javier Solana, “The European Central Bank (ECB) as a catalyst for change in EU Law. Part 1: The ECB's mandates”, Vo. 23, N. 1, 2016, 1-54; V. Borger, “Outright Monetary Transactions and the stability mandate of the ECB: Gauweiler”, Common Market Law Review, Vol. 53, 2016, 139–196; Clément Fontan, F. Claveau and Peter Dietsch, “Central Banking and Inequalities: Taking Off the Blinders”, Politics, Philosophy & Economics, Vol. 15, N. 4, 2016, 319-357, available online: Central Banking and Inequalities: Taking Off the Blinders | Canada Research Chair in Applied Epistemology (epistemopratique.org) [Last accessed 6 Feb 2021]; D. Lombardi and M. Moschella, “The government bond buying programmes of the European Central Bank: an analysis of their policy settings”, Journal of European Public Policy, 23, 2016, 851–70; Claire Kilpatrick, “On the Rule of Law and Economic Emergency: The Degradation of Basic Legal Values in Europe’s Bailouts”, Oxford Journal of Legal Studies, Vol. 35, N. 2, 2015, 325–53; Rosa Lastra, International Financial and Monetary Law, Oxford University Press, 2nd ed., 2015; Matthias Goldmann, “Adjudicating Economics? Central Bank Independence and the Appropriate Standard of Judicial Review”, German Law Journal, Vol. 15, 2014, 265–280; A. Héritier and D. Lehmkuhl, “New modes of governance and democratic accountability”, Government and Opposition, Vol. 46, 2011, 126–44; K. McNamara, “Rational fictions: central bank independence and the social logic of delegation”, West European Politics, Vol. 25, 2002, 47–76; Paul Magnette, “Towards ‘Accountable Independence’? Parliamentary Controls of the European Central Bank and the Rise of a New Democratic Model”, European Law Journal, Vol. 6, 2000, 326–340; Jakob de Haan and Sylvester C.W. Eijffinger, “The democratic accountability of the European Central Bank: a comment on two fairy-tales”, Journal of Common Market Studies, Vol. 387, N. 3, 2000, 393–407; ECB, “The accountability of the ECB”, November Monthly Bulletin, 2002, 45–57; Christopher Taylor, “The role and status of the European Central Bank: some prospects for accountability and cooperation”, in Colin Crouch (ed.), After the Euro. Shaping Institutions for Governance in the Wake of European Monetary Union, Oxford University Press, 2000, 179–202; Ottmar Issing, “The Eurosystem: Transparent and Accountable or ‘Willem in Euroland’”, Journal of Common Market Studies, Vol. 37, 1999, 503–519; Fabian Amtenbrink, The Democratic Accountability of Central Banks, Hart Publishing, 1999; Martin Westlake, “The European Parliament’s emerging powers of appointment”, Journal of Common Market Studies, Vol. 36, N. 4, 1998, 431–44; Mark A. Pollack, ‘Delegation, agency, and agenda-setting in the European Community’, International Organization, Vol. 51, N. 1, 1997, 99–134; A. S. Posen, “Declarations Are Not Enough: Financial Sector Sources of Central Bank Independence”, NBER, 1995, 253–274; Rosa Lastra, “The Independence of the European System of Central Banks”, The Harvard International Law Journal, Vol. 33, 1992, 475–520; Mathew D. McCubbins and Talbot Page, “A theory of congressional delegation”, in Mathew D. McCubbins and Terry Sullivan (eds), Congress. Structure and Policy, Cambridge University Press,1987, 409–25; Mathew D. McCubbins and Thomas Schwartz, “Congressional oversight overlooked: police patrols versus fire alarms”, American Journal of Political Science, Vol. 28, N. 1, 1984, 165–79.
[15] Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018. Also Stanislas Jourdan and Marc Beckmann, “Wieso eine grüne Geldpolitik legal und legitim ist”, Makronom, 7 December 2020, available online: Wieso eine grüne Geldpolitik legal und legitim ist (makronom.de) [Last accessed 6 Feb 2021].
[16] Opinion of AG Geelhoed in case C-161/04, Austria v Parliament and Council, paragraph 59. Opinion of AG Kokott in case C-304/01, Spain v Commission, EU:C:2003:619, paragraph 69. Case C-304/01, Spain v Commission, EU:C:2004:495, paragraphs 39-43.
[17] Mark Dawson and Ana Bobic, “Quantitative Easing at the Court of Justice – Doing whatever it takes to save the euro: Weiss and Others”, Common Market Law Review, Vol. 56, 2019, 1005–1040; Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018; Armin Steinbach, “All’s well that ends well? Crisis policy after the German constitutional court’s ruling in Gauweiler”, Maastricht Journal of European and Comparative Law, Vol. 24, 2017, 140–149; Takis Tridimas and Napoleon Xanthoulis, “A legal analysis of the Gauweiler case: Between monetary policy and constitutional conflict”, Maastricht Journal of European and Comparative Law, Vol. 23, 2016, 17–39.
The paper addresses the extension of this power, discussing the hierarchy of environmental protection vis à vis other goals mentioned in Article 3 TEU as well as vis à vis the ECB democratic legitimacy, independence and credibility. My contribution adds to the literature by fine tuning the legal criterion used to determine to what extent environmental objectives fall within the ECB mandate, with resource to the principle of sustainable development and the principal-agent theory. I argue that some cases where the decision of the ECB to prioritise environmental goals among its secondary objectives is usually considered as a political decision are more correctly assessed as an application of the principle of sustainable development. Moreover, my argument goes, in several other cases where a prioritisation of environmental goals among the ones mentioned in Article 3(3) TEU in fact needs to occur for the ECB to address climate change such prioritization might be democratically legitimized by the past communication of the European Parliament (hereafter also EP). Following the signalisation of a hierarchy among its secondary objectives by the EP, the ECB might determinate its secondary mandate, adopting in its strategy review the hierarchy signalled by the EP as operating rule, like in 1998 it defined what price stability is by spelling out the 2% rule[3]. Hence, the space of manoeuvre the ECB currently enjoys to pursue environmental protection within its mandate is significantly vast.
At her confirmation hearing before the European Parliament (4th September 2019), Christine Lagarde has pledged to ensure that all institutions, including the ECB, “have climate change risk and protection of the environment at the core of their understanding of their mission. (..) Primary mandate is price stability, of course. But it has to be embedded that climate change and environmental risk are mission-critical””[4] and should hence be seen as a priority[5]. Article 3 TEU includes environmental protection as one of several aims of the Union and a priori these goals are at the same level of normative priority[6]. Benoît Cœuré highlighted that it is not for the ECB itself to prioritize its secondary objectives as “[s]etting priorities among different objectives, this is the definition of politics […] and this is what parliaments do”, or, in other words, it is up to European political institutions to clarify the secondary priorities of the ECB (outside of price stability), in order for the central bank to get the full political legitimacy to act on this field[7].
I challenge a common broad stance in this matter[8] and argue that, by making use of the concept of sustainable development, the space, where addressing environmental goals in monetary policy indeed requires a political decision of the ECB entailing a prioritisation of environmental goals above other secondary objectives, is smaller than usually claimed. For example, the ECB´s decision to reduce the carbon content of its corporate sector purchase programme (hereafter CSPP) does not entail a political decision once one refocus the debate on the principle of sustainable development, since the core idea of this principle is that environmental protection, economic growth and social development are mutually compatible, rather than conflicting, objectives[9], and the ECB bias in favour of heavy carbon emitters[10] is not accurately reflected in public goods, as these sectors are still over-represented in the ECB purchases when compared to their contribution to employment and economic activity[11]. An important consequence of this approach is that ECB decisions taken following the application of the principle of sustainable development would be able to satisfy even the most rigorous national scrutiny performed by national constitutional courts, as the German Constitutional Court (Bundesverfassungsgericht), which requires the formal intervention of the German parliament (Bundestag) for any expansion of the ECB mandate[12].
But the principle of sustainable development is not always sufficient to underpin the greening of the ECB´s action without raising issues of democratic legitimacy, since Article 11 TFUE does not impose an absolute priority of environmental protection over other specific objectives found in Article 3 TEU[13]. In several cases, supporting the climate transition might require a prioritisation between ECB´s secondary objectives. Following the application of the principal-agent theory, I argue, adding to the literature discussing the gaps in the central bank mandate to address choices entailing non-purely technical matters[14], that the ECB should be considered democratically legitimised to perform the mentioned prioritisation when such hierarchy was previously signalled by the European Parliament with reference to monetary policy and the result of the decision does not conflict with its primary objective. To assess whether this occurred, all the relevant communication of the EP along a reasonable period of time needs to be analysed. Though, the literature highlights episodes where the EP underpinned the importance of having the ECB addressing climate change[15], it does not specifically assess whether such EP communication can be classified as an authorization to prioritise environmental concerns among other ECB´s secondary objectives.
Once such prioritisation is confirmed, my argument goes, some consequences with regard to the application of Article 11 TFEU by the Court of Justice of the European Union (hereafter CJEU) will emerge. For example, while in the absence of the named prioritisation the CJEU is expected to use a rather lenient standard of compliance with the procedural obligation established in Article 11 TFEU, using this norm as standard for reviewing the validity of ECB decisions only where ecological interests manifestly have not been taken into account or where they have been completely disregarded[16], because when EU institutions exercise their discretion in policy areas involving complex assessments, like in monetary policy, the CJEU has tended to regard the principle of proportionality as a rather lenient limit to such political discretion[17]; once the named prioritisation takes place, the Court is expected to adopt a more demanding standard of compliance, requiring the ECB to fully explains why, in the use of its discretion, it did not prioritise environmental objectives when the latter were compatible with its primary objective. Moreover, while in the absence of the named prioritisation, a principle of non-discrimination would be a relevant limit to the exercise of the ECB´s political discretion if, for example, the CSPP Decision excluded polluting issuers from the eligibility criteria, once environmental concerns are prioritised such an exclusion would be justified.
[1] Court of Justice of the European Union, Case C-493/17, Weiss and Others, ECLI:EU:C:2018:1000, paragraph 60.
[2] E. Cerrato, F. Agostini and N. Jaberg, “Why the PSPP judgment of the German Federal Constitutional Court gives the ECB another incentive to integrate climate change considerations into monetary policy”, available online: Why the PSPP judgment of the German Federal Constitutional Court gives the ECB another incentive to integrate climate change considerations into monetary policy – European Law Blog [Last accessed 3 Fev 2021]; Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018.
[3] ECB, “The outcome of the ECB’s evaluation of its monetary policy strategy”, Monthly Bulletin (2003), 79–92.
[4] Positive Money Europe, “What can we hope from Christine Lagarde as ECB President?”, 7 September 2019, available online: https://www.positivemoney.eu/2019/09/lagarde-ecb-president/ [Last accessed 13 Nov 2020].
[5] European Parliament (Committee on Economic and Monetary Affairs), Draft Report on the Council recommendation on the appointment of the President of the European Central Bank (C9-0048/2019 – 2019/0810(NLE)), 29 August 2019.
[6] Martin Wasmeier, ‘Integration of Environmental Protection as a General Rule for Interpreting Community Law, Common market law review, Vol. 38, N. 1, 2001, 159-177, 163.
[7] Wojtek Kalinowski, Nicolas Hercelin and Stanislas Jourdan,“Benoît Coeuré explique à l’Assemblée nationale comment la BCE peut agir pour le climat”, Veblen Institute for Economic Reforms, 23 May 2019, available online: https://www.veblen-institute.org/Benoit-Coeure-explique-a-l-Assemblee-nationale-comment-la-BCE-peut-agir-pour-le.html [Last accessed 13 Nov 2019].
[8] Nik de Boer and Jens van ’t Klooster, “The ECB, the courts and the issue of democratic legitimacy after Weiss”, Preprint and unedited version of the article forthcoming in the Common Market Law Review, volume 57 issue 6, 2020, available online: The ECB, the Courts and the Issue of Democratic Legitimacy After Weiss by Nik de Boer, Jens van 't Klooster :: SSRN [Last accessed 6 Feb 2021].
[9] Andrea Lenschow, “Greening the European Union: An Introduction”, in Andrea Lenschow (ed), Environmental policy integration: Greening sectoral policies in Europe, Earthscan 2002, 3-21, 5. See also Beate Sjåfjell, “The Legal Significance of Article 11 TFEU for EU Institutions and Member States”, in Beate Sjåfjell and Anja Wiesbrock (eds), The greening of European business under EU law: taking article 11 TFEU seriously, Paperback edition, Routledge, 2017, 51-72, 55.
[10] See for example Lisa Hanzl, Oliver Picek und Joel Tölgyes, “Wie „grün“ sind die EZB-Käufe österreichischer Unternehmensanleihen?”, Momentum Institut, Policy Brief 23/2020, December 2020, available online: pb_23.2020_1217_greenmonetarypolicy_0.pdf (momentum-institut.at) [Last accessed 6 Feb 2021]; Jens van ’t Klooster and Clément Fontan, “The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases”, New Political Economy, Vol. 25, N. 6, 2020, 865-879, available online: 10.1080/13563467.2019.1657077 [Last accessed 6 Feb 2021]; Yannis Dafermos, Daniela Gabor, Maria Nikolaidi, Adam Pawloff and Frank van Lerven; Decarbonising is easy. Beyond market neutrality in the ECB's corporate QE, Greenpeace, New Economics Foundation (NEF), SOAS University of London, University of the West of England and University of Greenwich, 20 October 2020; Patrick Honohan, "Should Monetary Policy Take Inequality and Climate Change into Account?”, Peterson Institute for International Economics Working Paper 19-18, October 2019; Stanislas Jourdan and Wojtek Kalinowski, Aligning Monetary Policy with the EU’s Climate Targets, Report from Veblen Institute for Economic Reforms and Positive Money Europe, April 2019, p. 3; Sini Matikainen, Emanuele Campiglio and Dimitri Zenghelis, ‘The Climate Impact of Quantitative Easing’, Grantham Research Institute on Climate Change and the Environment and Centre for Climate Change Economics and Policy (CCCEP) Policy Paper, May 2017; Corporate Europe Observatory, “The ECB’s ‘quantitative easing’ funds multinationals and climate change”, Corporate Europe Observatory [website], 12 December 2016, available online: The ECB’s ‘quantitative easing’ funds multinationals and climate change | Corporate Europe Observatory [Last accessed 6 Feb 2021]. Federica Agostini et al, “EU Treaties require Eurozone monetary policy to take environmental objectives into account”, FSJ Project Policy Brief 1/2020, May 2020, University of Glasgow, available online: Media_723215_smxx.pdf (gla.ac.uk) [Last accessed 6 Feb 2021]).
[11] Yannis Dafermos, Daniela Gabor, Maria Nikolaidi, Adam Pawloff, Frank van Lerven, “Decarbonising is easy. Beyond market neutrality in the ECB's corporate QE”, Greenpeace, New Economics Foundation, SOAS University of London, University of the West of England and University of Greenwich, 20 October 2020.
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[15] Javier Solana, The Power of the Eurosystem to promote environmental protection, University of Oslo Faculty of Law Legal Studies Research Paper Series N. 2018-23, 2018. Also Stanislas Jourdan and Marc Beckmann, “Wieso eine grüne Geldpolitik legal und legitim ist”, Makronom, 7 December 2020, available online: Wieso eine grüne Geldpolitik legal und legitim ist (makronom.de) [Last accessed 6 Feb 2021].
[16] Opinion of AG Geelhoed in case C-161/04, Austria v Parliament and Council, paragraph 59. Opinion of AG Kokott in case C-304/01, Spain v Commission, EU:C:2003:619, paragraph 69. Case C-304/01, Spain v Commission, EU:C:2004:495, paragraphs 39-43.
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