Firms with lower carbon emissions than their peers face greater difficulty in securing bank financing, a working paper published by the European Central Bank finds.

This is because European banks see greener firms as riskier than their counterparts that generate more pollution, the paper says. In Greening the economy: how public-guaranteed loans influence firm-level resource allocation, Bruno Buchetti, Ixart Miquel-Flores, Salvatore Perdichizzi and Alessio Reghezza argue policy should counteract