Greening central banking in the EU: closing the judicial accountability gap

This article discusses the idea of a judicial accountability gap in the obligations of EU central banks in relation to climate change policy. With the interest in incorporating climate change considerations into monetary policy on the rise, legal scholarship has focussed largely on the toolbox at the disposal and the political accountability of central bankers with respect to the sustainability transition. The judicial route has so far remained largely unexplored, the general global trend of climate litigation notwithstanding. In light of this omission, we develop a framework to address the judicial accountability gap in three steps. First, we explain the implications of the special status of climate change mitigation objectives in the EU constitutional order on members of the European System of Central Banks (ESCB). Then, we explain how these treaty obligations apply not only to the Eurosystem, which has been well explored in the literature, but also to non-euro area Member States. This point is particularly underexplored, despite its significant implications for the success of the EU’s sustainable finance agenda, which is contingent on a supportive macrofinancial regime. Finally, we discuss different judicial accountability routes to ensuring that central banks adequately incorporate the secondary mandate objectives in their policies. We examine whether establishing a “minimum standard” for meeting treaty obligations on incorporating climate change considerations into central bank policies could lead to the conceptualisation of a standard of judicial review across the EU, thereby enhancing the democratic legitimacy of central banks within the EU’s economic constitution.