
Climate Aspects of Monetary Policy Implementation
In line with its climate agenda, in 2022 the Eurosystem announced measures to incorporate climate change into its monetary policy implementation. The measures have been designed in line with the primary objective of maintaining price stability. They aim to reduce financial risk in the Eurosystem balance sheet, and to encourage transparency on the part of collateral issuers/debtors with regard to their greenhouse gas emissions. The goal is to encourage firms and financial institutions to alter their behaviour in order to support the green transition of the economy.
On 4 July 2022 and 19 July 2024 the Governing Council of the ECB adopted measures to incorporate climate change considerations in the monetary policy implementation framework:
Corporate bond holdings
Since October 2022 until the end of 2024 (when purchases were finished) we had been tilting the corporate bond holdings in the monetary policy portfolio towards issuers with better climate performance. Regular publications of climate-related information in connection with this programme began in March 2023.
Updating of the collateral framework
We aim to update our collateral framework and we are still working on appropriate measure. At first the measure will only be applied to debt securities of non-financial corporations, later on, when climate climate-related data improves, it will be extended to other financial assets.
Climate-related disclosure requirements
In pursuit of greater transparency, we aim to accept debt securities and credit claims of issuers and debtors that comply with the disclosure requirements under the Corporate Sustainability Reporting Directive as collateral in Eurosystem credit operations. The new collateral eligibility criteria are expected to be introduced in 2026. Test exercises will be run before the measure is enforced, so that counterparties are able to make the right preparations.
Improvements to risk management practices
With the aim of making improvements to how climate risks are addressed, we want to review and evaluate these risks in ratings that we use in our work. We encourge rating agencies to be more transparent about how they incorporate climate risks into their ratings, and to be more ambitious in their climate risk disclosure requirements with regard to issuers and debtors. We work closely with the competent authorities in this area. At the end of 2024 we aslo introduced minimum standards for incorporating climate risk into ratings of national central banks’ in-house credit assessment systems.
All of these measures are subject to regular review, with an assessment being made as to whether they are fit for purpose and aligned with the objectives of the Paris Agreement and the EU’s climate neutrality objectives.