The European Central Bank has announced the publishment of a new series of statistical indicators that aim to help analyse and manage climate risks in finance. The new series of statistical indicators show that the volume of sustainable and green bonds has grown faster that the larger bond marketplace.

This number is doubled in the euro area in the past two years. The data indicators cover three important areas, including sustainable finance, the impact of physical climate risks on loan and security portfolios, as well as financed emissions. The carbon emissions financed by companies and financial institutions are indicated as well, including information on the carbon intensity of the organisation’s securities and loan portfolios, as well as on the sector’s exposure to counterparties.

They offer information on models that include carbon-intensive representations. Indicators of this industry cover financed emissions and the total greenhouse gas emissions of an issuer or a debtor. For the sustainable finance area, the indicators follow the issuance, while holding debt instruments with sustainability characteristics.

These include social, green, sustainability, and sustainability-linked bonds in the Euro area. The aim of the indicators that focus on climate-related risks is to analyse the impact of natural hazards, such as wildfires, floods, storms, and the performance of loans, equities portfolios, and bonds. ECB’s studies and releases The European Central Bank released multiple studies and reviews over the past few months, covering multiple subjects.

Earlier in January of 2023, the bank announced the release of a study on the payments attitudes of customers that showed cash is the most frequent payment method used at POS. The research analysed the behaviour of customers in the euro area and highlighted that although cash remains the most popular and preferred method of payment at POS, its usage is generally declining. This study aimed to ensure that customers have freedom of choice when deciding how to pay for their products or services.

Following this research, the institution saw confirmation that there is still a strong demand for both cash and digital payments. The commitment to cash and the ongoing work on a digital euro aimed to guarantee that paying with public money remains an option. In December of 2022, ECB announced the results of the review of its risk control framework for collateralised credit operations.

The bank regularly reviews the framework to ensure an adequate level of risk detection and protection, and to archive risk equivalence across all the asset classes. Following the Governing Council’s decision to consider climate change risk when reviewing haircuts, announced in July 2022, ECB focused from this review forward to analyse and ensure the resilience of the haircuts to climate-related financial risks. The European Commission welcomed the studies and decisions of the European Central Bank to be treating EU-Bonds in the same way as the bonds issued by central governments or central banks under its risk control framework.

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