ECB starts disclosing climate impact of portfolios on road to Paris-alignment

The ECB has released its first set of climate-related financial disclosures, providing information on the carbon footprint and exposure to climate risks of its portfolios, as well as on climate-related governance, strategy and risk management.
The disclosures cover the Eurosystem’s corporate security holdings in the CSPP and PEPP, alongside the ECB’s euro-denominated NMPPs, comprising its staff pension fund and own funds portfolio, and are presented across two reports:
Climate-related financial disclosures of the Eurosystem’s corporate sector holdings for monetary policy purposes represents the Eurosystem’s first annual climate-related financial disclosures on its corporate securities holdings purchased for monetary policy purposes. The aim is to increase transparency and contribute to the global effort on climate change by managing and mitigating financial risks, promoting sustainable finance, and sharing expertise to encourage behavior changes. The report adheres to the recommendations of the TCFD and covers governance, strategy, risk management, and metrics and targets. It acknowledges that disclosed information is subject to change as climate-related data availability and quality evolve, and disclosure practices and expertise in managing climate-related risks improve.
Climate-related financial disclosures of the ECB’s non-monetary policy portfolios provides information on the ECB’s efforts to reduce the carbon footprint of its own funds and staff pension fund. The ECB has already cut the carbon footprint of its equity and corporate bond investments, comprising three-quarters of its staff pension fund. However, reducing the climate impact of its own funds relies on the commitments and actions of euro area governments. The ECB has increased the share of green bonds in its own funds portfolio from 1% to 13%. The disclosures align with the Eurosystem’s common framework to promote harmonization of disclosure practices, enhance understanding of climate risks, and contribute to the net-zero economy and EU climate goals.
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Taken together, the disclosures reveal that the corporate bonds held under the CSPP and PEPP are on a decarbonisation path, with issuers’ carbon intensity declining gradually despite an increase in greenhouse gas emissions due to the Eurosystem purchasing more securities for monetary policy purposes. The ECB has also reduced emissions from its staff pension fund’s corporate and equity investments by over 50% since 2019, with these assets already aligned with the Paris Agreement and low-carbon benchmarks.
The ECB plans to disclose climate-related information on these portfolios every year and expand the scope of disclosures to cover other monetary policy portfolios, while setting interim decarbonisation targets for its own funds portfolio and staff pension fund. The disclosures are part of an effort by all Eurosystem central banks to publish climate-related financial disclosures on their euro-denominated NMPPs using a common framework that defines minimum reporting requirements based on the recommendations of the Task Force on Climate-related Financial Disclosures. The ECB will regularly review its climate-related measures to ensure they support a decarbonisation path in line with the goals of the Paris Agreement and EU climate neutrality objectives.
In the forthcoming weeks, a specialized webpage of the European Central Bank (ECB) on Climate-related financial disclosures will present the published disclosures of all central banks within the Eurosystem.