Birgit Spiesshofer: "Green monetary policy - "whatever it takes"?" English Translation of Article published first (in German) in the Frankfurter Allgemeine Magazine Einspruch! (online) 10 December 2019

(Birgit Spiesshofer)

Dr. Birgit Spiesshofer has been undertaking truly important and path-breaking work in the area of the responsibility of business for harms that may be attached (that, of course, is the issue of the moment, that is the jurisprudence of "attachment") to the economic activities of enterprises and persons.  Her  monograph, Responsible Enterprise: The Emergence of a Global Economic Order (Munich: CH Beck, Oxford, Hart, 2018), is a remarkable analysis of the "state of the legal art"in this field and an excellent basis for thinking about the paths already being carved out for going forward (for my review of this work, see "The Enterprise of Responsibility:" Reviewing Birgit Spiesshofer, "Responsible Enterprise). 

Dr. Spiesshofer has recently written a short essay, Green monetary policy - "whatever it takes"? It suggests both the complexities of implementing even the most well meaning policy, as well as the constant balancing that most be undertaken when complex liberal democracies operating in a multi-level (sui generis?) confection of states, regions, and the like, seek to respond to critical issues. The essay reminds us that there is nothing easier to make than a for publication slogan; but that to turn that into viable long term policy, much less operational modalities, becomes an altogether more daunting task.  In a sense, climate change (and the resulting necessary policy initiatives among polycentric governance systems) provides a good opportunity for the EU and its components to lead by example, but also to refine their working styles to further a cause with respect to which everyone on earth has a significant stake. 

The essay was originally published as  Grüne Geldpolitik - „whatever it takes“?only in German, in the Frankfurter Allgemeine Magazine Einspruch! (online) Dece,ber 10, 219. Dr. Spiesshofer has translated the essay into English and the Frankfurter Allgemeine has graciously agreed to its re-posting here.

The essay and Dr. Spiesshofer's brief bio follow. 

Green monetary policy - "whatever it takes"? 

Column by Birgit Spiesshofer, published first (in German) in Frankfurter Allgemeine Magazine Einspruch! (online) December 10, 2019

Christine Lagarde, the new president of the European Central Bank (ECB), wants to make climate protection a priority concern of the central bank. Is she allowed to do so? According to the European Treaties, the primary objective of the ECB is to maintain price stability. However, the Treaties also state that the ECB supports the general economic policy of the European Union, insofar as this is possible without compromising the objective of price stability. Does this sentence give the ECB the right - or even the duty? - to take up the cause of climate protection as one of the central themes of EU policy? Does this sentence impart a kind of competence competence that the ECB can (or must) actively support the economic policy objectives of the EU by using its instruments of power and can thus choose further objectives and take on tasks besides price stability? It is only that they must not interfere with the objective of price stability - but don't they have to promote it either? This interpretation would give the ECB a great deal of room for manoeuvre and increase its power, especially if this is understood as an organic development of the "whatever it takes" (loosely translated: whatever serves a good purpose) policy formulation already creatively handled under Mario Draghi. 

            The President of the German Bundesbank, Jens Weidmann, and Ottmar Issing, once Chief Economist of the ECB, critically view Lagarde's announcement as an inadmissible arbitrary expansion of the ECB's competence in the political sphere without the necessary democratic legitimation. For Weidmann it is not (any longer) an issue that risks resulting from climate change have to be assessed and taken into account in the context of bond purchases, in ratings by rating agencies and in the context of macro-prudential supervision designed to combat risks to financial stability. The consideration of ESG (environment, social, governance) factors in the financial market can now be regarded as best practice.

Sustainable Investment Strategies on the Riseç

            But Lagarde's statement seems to go much further. Irrespective of the extensive interpretation of the formal legal requirements of the European Treaties, it is supported by a broad movement that, under the headings of "Responsible Finance" and "Responsible Investment", wants to activate the power of all players active in the capital market in order to implement sustainable, socially responsible and honest management. For this good cause, not only at the ECB, but across the board, competencies, tasks and objectives are being reinterpreted - not necessarily with the involvement of a parliament. 

            It is not only the EU Commission that is creepingly expanding its scope of competence and tasks by using soft law and other soft steering mechanisms. The parallel with developments among institutional investors is also revealing: originally, the fiduciary duties of pension funds and other institutional investors were understood to mean that they should achieve maximum returns for their investors. For some time now there has been a creeping reinterpretation towards a focus on sustainability. As early as 2006, the UN Principles for Responsible Investment called for voluntary compliance with ESG requirements by investors, but with the proviso that this must be compatible with their fiduciary duties. Following a lengthy international discussion process, the EU Commission has now recently announced that it sees no legal obstacles to the consideration of sustainability criteria by institutional investors in the European Union - albeit with the essential proviso: provided that the ESG factors are relevant to financial returns and risk management. This means that institutional investors are allowed to take climate protection into account within the scope of their remit, not only when making investment decisions, but also in the role as "active shareholders" expected of them under the heading of Responsible Investment. They should use their market power for sustainability within the scope of their remit, but not freely, but in accordance with their statutory purpose. 

            This could also be an approach to clarify the role of the ECB in the sustainability discourse. The interpretation would then not be that of a comprehensive economic policy competence of the ECB based solely on the wording, insofar as it does not interfere with the objective of price stability, but rather a teleological orientation towards the statutory purpose of the ECB, which guides and limits its competence to promote sustainability.

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 Dr. Birgit Spiesshofer MCJ (New York University), Attorney at Law, has been an Of Counsel in the Berlin office since April 1, 2010 and advises primarily on regulation, policy and corporate social responsibility (CSR). Previously Birgit worked at Hengeler Mueller (1993- 2010), after becoming a partner in July 1995. Birgit started her career in 1989 at Feddersen Laule (today White & Case). In 1990 she worked as a foreign associate at Kaye Scholer Fierman Hays & Handler in Washington D.C. Birgit established the “Gaemo Group – Corporate Responsibility International” in June 2009. She was, inter alia, Chair of the CSR Committee of the Council of Bars and Law Societies of Europe (CCBE), Co-Chair of the CSR Committee of the International Bar Association and member of the Constitutional Law and Human Rights Committees of the German Lawyers Association (DAV). She is the founding Chair of the Compliance and CSR Committee of the DAV and a member of the CSR and Anti-Corruption Commission and the Environment and Energy Commission of the International Chamber of Commerce. Since her Habilitation (2018) in International Economic Law and Business Ethics, she is adjunct professor (Privatdozentin) at the University of Bremen. Numerous publications have named Birgit as one of the leading practitioners in the area of public law. Birgit publishes and speaks extensively on regulation, policy and CSR matters. In addition, she lectures on Business and Human Rights, CSR and International Environmental Law at the Free University Berlin and the University of Bremen.