ECB publishes plans on bond decarbonisation


The European Central Bank (ECB) has published its plans on how it intends to decarbonise corporate bond holdings in its monetary policy portfolio.

According to ESG Investor, the ECB will use an ‘issuer-specific’ carbon score to ‘tilt’ bond holdings.

The score will be based on a combination of three sub-scores – including a backward-looking emissions sub-score based on issuers’ past emissions, a forward-looking target sub-score using the objectives set by issuers to reduce future emissions and a climate disclosure sub-score which assesses issuers’ emissions reporting.

The ECB said that it hopes to reduce the Eurosystem’s exposure to climate-related financial risk.

The Bank added that the methodology will be ‘reviewed regularly’ and may ‘evolve to account for new developments in terms of data, models, regulation and risk assessment capabilities’.

Tilting will also be applied to all corporate bond purchases settled as of 1 October 2022, with the ECB publishing climate-related information on its holdings from the first quarter of next year.

The ECB recently released its intentions to form a crypto regulatory framework that aims to make how banks offer crypto assets more consistent.

There is currently no harmonised regulatory framework governing crypto-asset activities and services in the EU, but the ECB said this will change with the finalisation of several regulatory initiatives at European and international level.

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