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Eurosystem and ECB portfolios are steadily decarbonizing, climate-related reports show

June 25, 2024

  • The Eurosystem’s tilt framework played an important role in reducing financed emissions associated with corporate assets in monetary policy portfolios in 2022 and 2023.
  • Disclosure expanded to cover more than 99% of the Eurosystem’s monetary policy holdings
  • The disclosures are intended to improve transparency and support broader efforts to reduce the climate data gap.
  • Interim targets will be set to monitor the emissions reduction trajectory of corporate asset portfolios on a path that supports the goals of the Paris Agreement.

The European Central Bank (ECB) today published its second set of climate-related financial reports, providing information on the carbon footprint of its portfolios and their exposure to climate risks, as well as on governance, strategy and climate-related risk management. .

Disclosures show that carbon emissions associated with the Eurosystem’s corporate sector portfolios have continued to decline. Most of this reduction was due to security issuers becoming more carbon efficient. About a fifth of the total emissions reductions in 2022 and 2023 were due to the Eurosystem’s efforts to tilt reinvestments towards emitters with better climate performance.

In addition, the Governing Council agreed that interim emissions reduction targets will be set for corporate sector portfolios in the asset purchase program (APP) and the pandemic emergency purchase program (PEPP). These provisional objectives will take into account, as a guide, the requirements of the EU Reference Regulation and the accompanying Commission Delegated Regulation. At this stage, these interim targets will be used internally to monitor the emissions reduction trajectory of corporate sector portfolios. If deviations from the desired trajectory are identified, corrective measures will be evaluated, within the mandate of the Governing Council, on a case-by-case basis.

The scope of information on assets held for monetary policy purposes has been significantly expanded. Last year they focused exclusively on corporate sector assets, while this year’s set of disclosures also includes the Eurosystem’s holdings of public sector assets and bonds covered under the APP and PEPP, as well as external reserves. of the ECB. This means that disclosures now cover 99.7% of total assets held for monetary policy purposes under the APP and PEPP. Only holdings of asset-backed securities (ABS) are excluded, for which insufficient data are available. The data available for the assets subject to disclosure shows that their associated emissions are also gradually decreasing, in line with the decarbonization efforts of the issuers.

The information on the ECB’s non-monetary policy portfolios covers investments of the ECB’s staff pension funds and the ECB’s own funds. All corporate sector investments in the ECB staff pension fund now track the EU’s Paris-aligned benchmarks and their associated emissions were reduced by around 50% in 2023 compared to the previous year. Following the introduction of these benchmarks, the ECB aims to further reduce the carbon footprint of these investments by an annual average of at least 7% in the future. The proportion of green bonds in the ECB’s own funds portfolio increased from 13% in 2022 to 20% in 2023, and now provides more than €4.5 billion in financing for the green transition. The ECB plans to increase this proportion to 25% in 2024.

By providing climate-related information on central banks’ portfolios, the ECB and the Eurosystem aim to lead by example, improve transparency and support broader efforts by regulators and other stakeholders to close gaps in data and climate reporting.

Looking ahead, the ECB and the Eurosystem will continue to improve the quality of their disclosures in line with developments in climate-related data. Within its mandate, the Eurosystem will also continue to reduce the carbon footprint of its corporate sector portfolios under the APP and PEPP in a path that supports the objectives of the Paris Agreement.

For media inquiries, please contact Clara Martín Marquéstel.: +49 69 1344 17919.

Grades

  • The ECB’s non-monetary policy (NMP) disclosures are part of a concerted effort by all Eurosystem central banks to publish climate-related financial disclosures in their NMP portfolios using a common framework that defines minimum reporting requirements based in the recommendations of the Task Force on Climate-Related Financial Disclosures.

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