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ECB Climate Plan Seen Hitting Debt Costs as Polluters Targeted

July 4, 2022, 12:40 PM

The European Central Bank’s decision to use its corporate bond program to penalize companies that pollute is set to alter the debt financing landscape, according to Jo Richardson, portfolio strategy head at the Anthropocene Fixed Income Institute.

The ECB’s plan, unveiled on Monday, is designed to kick in gradually to avoid jolting markets. Nonetheless, it’s “a clear negative in terms of refinancing opportunities for these high intensity emitters,” Richardson, who previously spent almost two decades at JPMorgan Chase and Co., said by email.

If the ECB, which can own around a third of any given bond issue, “doesn’t show ...