ECB publishes new climate-related statistical indicators to narrow climate data gap

The European Central Bank (ECB) has published a first set of climate-related statistical indicators to better assess the impact of climate-related risks on the financial sector and to monitor the development of sustainable and green finance, fulfilling another of the commitments of its climate action plan.
ECB understands high-quality data as a key to close the climate data gap and to reach further progress towards a climate-neutral economy.
Both experimental and analytical methods are used in the new indicators: Not all of the quality standards for official ECB statistics are met by experimental data, although many of them are; the quality of analytical data is poorer with various limits.
As a result, the indications are still under development and should only be used with caution. They are meant to spark a larger discussion on how to properly collect data on climate-related risks and the green transition among important stakeholders, including the statistics and research community. The ECB will endeavour to enhance the methodology and the data used in conjunction with the national central banks.
Specifically, the indicators cover three areas:
1. Experimental indicators on sustainable finance provide an overview of debt instruments labelled as “green”, “social”, “sustainability” or “sustainability-linked” by the issuer that are issued or held in the euro area. Without an internationally accepted definition of a green or sustainable bond, the data is less reliable overall.
2. Analytical indicators on carbon emissions financed by financial institutions provide „information on the carbon intensity of the securities and loan portfolios of financial institutions, and on the financial sector’s exposure to counterparties with carbon-intensive business models“. The majority of the emissions financed via equity or bonds are held by investment funds, but the most carbon-intensive activities are held by the banking sector, due to a given level of revenue.
3. Analytical indicators on climate-related physical risks analyse the „impact of natural hazards, such as floods, wildfires or storms, on the performance of loans, bonds and equities portfolios“, having different risk levels and estimated damages and losses.