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ECB provides new climate-related statistical indicators to narrow the climate data gap

To better understand the impact of climate-related risks on the financial sector and to track the growth of sustainable and green finance, the European Central Bank (ECB) published on 24 January 2023 a first set of climate-related statistical indicators.

Creating these indicators is complex and still has some weaknesses. These limitations result in a first step as data published as experimental statistics or analytical indicators and should be used with caution. Overall, there are three types of indicators:

  • Experimental indicators on sustainable finance

The sustainable finance metrics summarize sustainable debt securities issued and held in the euro region. According to the data, the amount of sustainable and green bonds (labeled as "green," "social," "sustainability," or "sustainability-linked") has increased by more than double over the last two years, outpacing the growth of the entire euro area bond market. It is important to note that "self-labeled" instruments are also currently considered in this framework, as there is no universal standard.

  • Analytical indicators on carbon emissions financed by financial institutions

They show the carbon intensity of securities and loan portfolios of financial institutions and the financial sector's exposure to counterparties with carbon-intensive business models.

According to preliminary findings, investment funds hold most of the emissions in the eurozone financed by equity or bonds. The data do, however, indicate that the banking industry is the primary funding source for the most carbon-intensive activities.

  • Analytical indicators on climate-related physical risks

The impacts of natural disasters, such as floods, wildfires, or storms, on the performance of loan, bond, and equity portfolios are examined through analytical indicators on climate-related physical risks. On the one hand the risk of windstorms significantly impacts financial portfolios in the euro area, there is little chance that this hazard will cause significant harm. On the other hand, floods could cause more losses and damages.

The indications are still being developed and should be used with caution. They are meant to spark a more extensive discussion on properly collecting climate-related risks data and the green transition among critical stakeholders, including the statistics and research community. The ECB and the national central banks will collaborate to enhance the data and methodology. New data sources, expected to become available in line with EU initiatives on climate-related disclosures and reporting (SFDR, EU Taxonomy, CSRD and EBA Pillar 3 disclosure), will help in this respect.

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RBI Regulatory Advisory

Raiffeisen Bank International AG | Member of RBI Group | Am Stadtpark 9, 1030 Vienna, Austria  | Tel: +43 1 71707 - 5923