The European Central Bank (ECB) announced a series of moves to further incorporate climate change considerations into its monetary policy framework, including actions to decarbonize its portfolio of corporate bond holdings over time, and to introduce climate-related disclosure requirements for collateral. According to the ECB, the new measures aim to reduce financial risk to the Eurosystem balance sheet related to climate change, in line with the primary objective to maintain price stability. Additionally, the actions are designed to encourage transparency, and to support the green transition of the economy.

Under the ECB’s revised policy framework, the central bank intends to transition the Eurosystem’s nearly EUR350mn corporate bond portfolio towards issuers with better climate performance, which will be assessed in terms of greenhouse gas emissions, carbon reduction targets and climate-related disclosures. The process will be done gradually, through the reinvestment of redemptions over time. The ECB will begin publishing climate-related information on corporate bond holdings as of Q1 2023.

Source: ESGToday