Eurosystem gets data on companies’ climate impacts

March 18, 2022|Written by David Clarke|Banque de France, Bundesbank, European Central Bank

Eurosystem central banks now have access to climate-related data on thousands of companies, after the Bundesbank entered into a contract with two providers.

An immediate use of the data will be to apply sustainable investment principles in the banks’ non-monetary policy portfolios, such as their pension funds and investments. But the Bundesbank said it could also be deployed to assist their regulatory functions.

Eurosystem central banks agreed last year on a common approach towards sustainable and responsible investment principles, and on plans for climate-related disclosures. They are aiming to start disclosing information based on the new data in the first quarter of 2023.

The data relates both to the climate risks facing securities issuers, and to their climate impacts. It is provided by the Paris-based Carbon4Finance, and Institutional Shareholder Services, which is headquartered in the US.

The data provided by Carbon4Finance includes Scope 1, 2 and 3 greenhouse gas emissions, and emissions intensity data. The firm says it has a worldwide coverage encompassing more than 124,000 securities and 8,000 entities.

Last year, the thinktank Reclaim Finance criticised Eurosystem central banks for their slow progress in greening their portfolios, and pointed out they had almost all had no restrictions on fossil fuel investments. The group called on the banks to make a general commitment to align themselves with the Paris Agreement, and to stop investing in companies developing new fossil fuel projects.

Pierre Monnin, a senior fellow at the Council for Economic Policies, wrote on Twitter that the new climate indicators provide a sound basis for the ECB to implement targeted monetary policy operations. He explained that it could also serve as the basis for reflecting climate risks in micro- and macroprudential regulation.

A Bundesbank spokesperson confirmed that the data could have a regulatory application. “Central banks joining the framework agreements will be able to use the climate-related data for their regulatory tasks and activities being necessary for the performance of their missions and responsibilities,” they told Green Central Banking.

This page was last updated April 5, 2022

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