The European Central Bank (ECB) released on Monday (19) more details on how it intends to gradually decarbonize holdings of corporate bonds in its monetary policy portfolios, in a path in line with the commitments of the Paris Agreement.
One of the objectives is to reduce the Eurosystem’s exposure to climate-related financial risk.
This follows the Governing Council’s July 2022 decision to dedicate Eurosystem corporate bond purchases to issuers with better climate performance.
In addition, these measures support the ecological transition of the economy in line with the EU’s net zero greenhouse gas emission target.
The global climate score that will be used will be based on a number of factors such as emissions, climate ambition and availability of verification of the information.
The first item, for example, looks at how companies perform against their peers in a specific industry, as well as against all eligible bond issuers.
Those with better performance receive a better score.
The Eurosystem will use the climate score to adjust its offers on the primary market to favor issuers that perform better in this regard and to impose maturity limits on the bonds of issuers with lower scores.
The ECB will begin publishing climate-related information on its holdings of corporate bonds from the first quarter of 2023 and will regularly report on progress.
Source: CNN Brasil
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