The FT reports that the two people involved in the discussions say that when finalised, the review will reflect Lagarde’s goal to feature climate change action as a “mission critical” priority for the bank.

This update reinforces comments Lagarde made in September, when she promised to make addressing climate change an economic priority at the ECB. She argued that the central bank can “direct” its own corporate asset purchases toward green bonds once the EU and other regulators agreed on a common framework for green finance.

A letter due to be published today which incudes over 150 signatures from industry leaders, calls on Lagarde's ECB to “commit to gradually eliminating carbon-intensive assets from its portfolios,” and “without waiting on the ‘green taxonomy’ developed by the European Commission, climate-impact criteria should be used to screen all assets currently eligible for monetary operations.”

Whether the letter falls on deaf ears will likely be seen on Monday, when Lagarde is due to appear before the European Parliament.

Lagarde’s focus on driving climate change action through monetary policymaking is not universally held, with Jay Powell of the US Federal Reserve recently stating that climate change is not within the purview of the Fed, the responsibility lies with elected officials.

Bank of England governor Mark Carney has outlined proposals to incorporate global warming and green policies within its stress tests but falls short of utilising monetary policy.

Elena Philipova, global head ESG proposition at Refinitiv recently told Finextra “European regulators are leading the way with the most comprehensive and ambitious plans put forward thus far on transitioning capital markets to be sustainable and finance the 2030 Agenda. This top down pressure is making all market participants, large and small, elevate sustainability to the top of their priorities.”

Philipova argues that in order to increase the issuance of green bonds and channel more capital towards them, “the market needs the creation of industry wide standards and labels. This is also in line with the European Commission Action Plan on financing sustainable growth.”

Finextra Research and ResponsibleRisk will be focusing on sustainable finance in commercial banking at the first SustainableFinance.Live Co-Creation Workshop on Wednesday 4th December at 6 Alie Street in London.

Register your interest here for our inaugural event, where you can discuss what is driving the demand for sustainability and why companies are struggling to meet the benchmark set by the UN General Assembly’s Sustainable Development Goals (SDGs).