Climate-polluting companies in Europe are paying higher interest rates on loans and bonds than greener firms.
That’s according to three central bank analyses that indicate the region’s financial markets are making it costlier for high-carbon businesses to access money as part of the global transition away from fossil-based energy. The findings suggest European markets have started to hedge against climate-related risks faced by companies that are not on track to reduce their climate pollution, as Europe works to achieve net-zero emissions by 2050.
Researchers at the European Central Bank examined whether the region’s banks are charging carbon-intensive companies higher interest rates on loans than their cleaner counterparts. Analysts at the De Nederlandsche Bank, meanwhile, studied the same question, but as it relates to the interest that companies pay on corporate bonds.
They found that companies with smaller carbon footprints are paying less money in interest than major emitters.
