Grown much faster than the overall eurozone bond market
Preliminary results for carbon emissions show that in the euro area, most of the emissions financed through stocks or bonds are held by investment funds.
The volume of sustainable and green bonds has more than doubled in the past two years and grown much faster than the overall eurozone bond market, according to climate change-related statistics released on Tuesday by the European Central Bank (ECB).
These indicators are characterized by the ECB as experimental with the aim of analyzing climate-related risks in the financial sector and monitoring the green transition. Note that this is a work in progress and indicators should be used with caution.
Preliminary results for carbon emissions show that in the euro area, most of the emissions financed through shares or bonds are held by investment funds. However, evidence shows that the most carbon-intensive activities are financed through the banking sector, as financing companies produce relatively more emissions in their business activities to achieve a given level of revenue.
Indices for climate-related natural risks analyze the impact of natural risks such as floods, fires or storms on the performance of loans, bond and equity portfolios. While the risk of windstorms greatly affects financial portfolios in the euro area, the risk of causing serious damage is rather low. In contrast, floods are limited to coastal and riverine areas, but are estimated to have a higher level of damage and loss.
As reported, in July 2022 the ECB published a detailed action plan for climate on how to integrate climate change into its monetary policy framework. In October 2022, it began shifting its corporate bonds to issuers with better climate performance. The publication of new climate-related indicators is another step towards implementing the ECB's climate commitments.
