{"id":112690,"date":"2022-07-07T03:00:25","date_gmt":"2022-07-07T01:00:25","guid":{"rendered":"https:\/\/www.cde.ual.es\/?p=112690"},"modified":"2022-07-06T12:00:35","modified_gmt":"2022-07-06T10:00:35","slug":"ecb-takes-further-steps-to-incorporate-climate-change-into-its-monetary-policy-operations","status":"publish","type":"post","link":"https:\/\/www.cde.ual.es\/en\/ecb-takes-further-steps-to-incorporate-climate-change-into-its-monetary-policy-operations\/","title":{"rendered":"ECB takes further steps to incorporate climate change into its monetary policy operations"},"content":{"rendered":"<p><strong>The Governing Council of the European Central Bank (ECB) has decided to take further steps to include climate change considerations in the Eurosystem\u2019s monetary policy framework.<\/strong><\/p>\n<p><a href=\"https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/03\/green-energy-scaled.jpg\"><img decoding=\"async\" class=\"aligncenter wp-image-104838 size-full\" src=\"https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/03\/green-energy-scaled.jpg\" alt=\"El BCE incorpora el cambio clim\u00e1tico en sus operaciones de pol\u00edtica monetaria\" width=\"2560\" height=\"1707\" srcset=\"https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/03\/green-energy-scaled.jpg 2560w, https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/03\/green-energy-300x200.jpg 300w, https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/03\/green-energy-1024x683.jpg 1024w, https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/03\/green-energy-768x512.jpg 768w, https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/03\/green-energy-1536x1024.jpg 1536w, https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/03\/green-energy-2048x1365.jpg 2048w\" sizes=\"(max-width: 2560px) 100vw, 2560px\" \/><\/a><\/p>\n<p>It decided to adjust corporate bond holdings in the Eurosystem\u2019s monetary policy portfolios and its collateral framework, to introduce climate-related disclosure requirements and to enhance its risk management practices.<\/p>\n<p>These measures are designed in full accordance with the Eurosystem\u2019s primary objective of maintaining price stability. They aim to better take into account climate-related financial risk in the Eurosystem balance sheet and, with reference to our secondary objective, support the green transition of the economy in line with the EU\u2019s climate neutrality objectives. Moreover, our measures provide incentives to companies and financial institutions to be more transparent about their carbon emissions and to reduce them.<\/p>\n<p><strong>The following concrete measures have been decided:<\/strong><\/p>\n<p><strong>Corporate bond holdings:<\/strong>\u00a0The Eurosystem aims to gradually decarbonise its corporate bond holdings, on a path aligned with the goals of the Paris Agreement. To that end, the Eurosystem will tilt these holdings\u00a0towards issuers with better climate performance through the reinvestment of the sizeable redemptions expected over the coming years. Better climate performance will be measured with reference to\u00a0lower greenhouse gas emissions, more ambitious carbon reduction targets and better climate-related disclosures.<\/p>\n<table style=\"width: 99.9988%; border-collapse: collapse; border-style: double; border-color: #001f7d;\" cellpadding=\"0,5\">\n<tbody>\n<tr>\n<td style=\"width: 100%;\"><a href=\"https:\/\/www.cde.ual.es\/la-transicion-ecologica-de-la-ue-debe-basarse-en-una-elevada-aceptabilidad-social\/\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignleft\" src=\"https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/07\/Hanna-ZDANOWSKA.jpg\" alt=\"\" width=\"141\" height=\"170\" \/><\/a><\/p>\n<h4 class=\"entry-title\"><a href=\"https:\/\/www.cde.ual.es\/la-transicion-ecologica-de-la-ue-debe-basarse-en-una-elevada-aceptabilidad-social\/\" target=\"_blank\" rel=\"noopener\">La transici\u00f3n ecol\u00f3gica de la UE debe basarse en una elevada aceptabilidad social<\/a><\/h4>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><strong>Collateral framework:<\/strong>\u00a0The Eurosystem\u00a0will limit the share of assets issued by entities with a high carbon footprint that can be pledged as collateral by individual counterparties when borrowing from the Eurosystem. The new limits regime aims to reduce climate-related financial risks in Eurosystem credit operations. At first, the Eurosystem will apply such limits only to marketable debt instruments issued by companies outside the financial sector (non-financial corporations). Additional asset classes may also fall under the new limits regime as the quality of climate-related data improves. The measure is expected to apply before the end of 2024 provided that the necessary technical preconditions are in place. To encourage banks and other counterparties to prepare early, the Eurosystem will run tests of the limits regime ahead of its actual implementation. Further details, including the timeline, will be communicated in due course.<\/p>\n<p>Additionally, the Eurosystem will, as of this year, consider climate change risks when reviewing haircuts applied to corporate bonds used as collateral. Haircuts are reductions applied to the value of collateral based on its riskiness.<\/p>\n<table style=\"width: 99.9988%; border-collapse: collapse; border-style: double; border-color: #001f7d;\" cellpadding=\"0,5\">\n<tbody>\n<tr>\n<td style=\"width: 100%;\"><a href=\"https:\/\/www.cde.ual.es\/ficha\/learning-for-the-green-transition-and-sustainable-development\/\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignleft\" src=\"https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/06\/Learning-for-the-green-transition-and-sustainable-development.png\" alt=\"\" width=\"141\" height=\"170\" \/><\/a><\/p>\n<h4 class=\"entry-title\"><a href=\"https:\/\/www.cde.ual.es\/ficha\/learning-for-the-green-transition-and-sustainable-development\/\" target=\"_blank\" rel=\"noopener\">Learning for the green transition and sustainable development<\/a><\/h4>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3 dir=\"ltr\" style=\"text-align: justify;\"><\/h3>\n<p><strong>Climate-related disclosure requirements for collateral:<\/strong>\u00a0The Eurosystem will only accept marketable assets and credit claims from companies and debtors that comply with the Corporate Sustainability Reporting Directive (CSRD) as collateral in Eurosystem credit operations (once the directive is fully implemented). As the implementation of the CSRD has been delayed, the new eligibility criteria are expected to apply as of 2026.<\/p>\n<p>This requirement will apply to all companies within the scope of the CSRD. It will help improve disclosures and generate better data for financial institutions, investors and civil society.<\/p>\n<p>To encourage stakeholders to align with the new rules early on, the ECB will run test exercises one year ahead of actual implementation.<\/p>\n<p><strong>Risk assessment and management:<\/strong>\u00a0The Eurosystem will further enhance its risk assessment tools and capabilities to better include climate-related risks. For example, ECB analysis has shown that, despite the progress already achieved by the rating agencies, current disclosure standards are not yet satisfactory.<\/p>\n<p>To improve the external assessment of climate-related risks, the Eurosystem will urge rating agencies to be more transparent about how they incorporate climate risks into their ratings and to be more ambitious in their disclosure requirements on climate risks. The Eurosystem is in close dialogue with the relevant authorities on this matter.<\/p>\n<p>Additionally, the Eurosystem agreed on a set of common minimum standards for how national central banks\u2019 in-house credit assessment systems should include climate-related risks in their ratings. These standards will enter into force by the end of 2024.<\/p>\n<table style=\"width: 99.9988%; border-collapse: collapse; border-style: double; border-color: #001f7d;\" cellpadding=\"0,5\">\n<tbody>\n<tr>\n<td style=\"width: 100%;\"><a href=\"https:\/\/www.cde.ual.es\/como-proteger-a-los-grupos-vulnerables-del-cambio-climatico\/\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignleft\" src=\"https:\/\/www.cde.ual.es\/wp-content\/uploads\/2022\/07\/woman-3188744_1920-768x512.jpg\" alt=\"\" width=\"200\" height=\"133\" \/><\/a><\/p>\n<h4 class=\"entry-title\"><a href=\"https:\/\/www.cde.ual.es\/como-proteger-a-los-grupos-vulnerables-del-cambio-climatico\/\" target=\"_blank\" rel=\"noopener\">\u00bfC\u00f3mo proteger a los grupos vulnerables del cambio clim\u00e1tico?<\/a><\/h4>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Looking ahead, the Governing Council is committed to regularly reviewing all the measures outlined above. It will assess their effects and adapt them, if necessary: (1) to confirm that they continue to fulfil their monetary policy objectives; (2) to ensure \u2013 within its mandate \u2013 that the relevant measures continue to support the decarbonisation path to reach the goals of the Paris Agreement and the EU climate neutrality objectives; (3) to respond to future improvements in climate data and climate risk modelling or changes in regulation; and (4) to address additional environmental challenges, within its price stability mandate.<\/p>\n<p>Companies and governments need to do their part to address climate risks by enhancing disclosures and following up on their commitments to reduce carbon emissions.<\/p>\n<p><strong>More information: <a href=\"https:\/\/www.ecb.europa.eu\/press\/pr\/date\/2022\/html\/ecb.pr220704~4f48a72462.en.html\">European Central Bank &#8211; Press release<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Governing Council of the European Central Bank (ECB) has decided to take further steps to include climate change considerations in the Eurosystem\u2019s monetary policy framework. It decided to adjust corporate bond holdings in the Eurosystem\u2019s monetary policy portfolios and its collateral framework, to introduce climate-related disclosure requirements and to enhance its risk management practices. [&hellip;]<\/p>\n","protected":false},"author":101011,"featured_media":104839,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[4090,346,4088],"tags":[4538,422,6570,866,1217,6571],"class_list":{"0":"post-112690","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy-finance","8":"category-eu-news","9":"category-market","10":"tag-carbon-footprint","11":"tag-climate-change","12":"tag-corporate-bond","13":"tag-ecb","14":"tag-europe","15":"tag-eurosystem","16":"entry"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>ECB takes further steps to incorporate climate change into its monetary policy operations | CDE Almer\u00eda - Centro de Documentaci\u00f3n Europea - Universidad de Almer\u00eda<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.cde.ual.es\/el-bce-incorpora-el-cambio-climatico-en-sus-operaciones-de-politica-monetaria\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ECB takes further steps to incorporate climate change into its monetary policy operations | CDE Almer\u00eda - Centro de Documentaci\u00f3n Europea - Universidad de Almer\u00eda\" \/>\n<meta property=\"og:description\" content=\"The Governing Council of the European Central Bank (ECB) has decided to take further steps to include climate change considerations in the Eurosystem\u2019s monetary policy framework. It decided to adjust corporate bond holdings in the Eurosystem\u2019s monetary policy portfolios and its collateral framework, to introduce climate-related disclosure requirements and to enhance its risk management practices. 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It decided to adjust corporate bond holdings in the Eurosystem\u2019s monetary policy portfolios and its collateral framework, to introduce climate-related disclosure requirements and to enhance its risk management practices. 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