The European Central Bank (ECB) has published its first climate-related statistical indicators to help it better assess the impact of climate-related financial risks and the development of green financing. These indicators provide time-series information on outstanding amounts and financial transactions relating to issuances and holdings of sustainable debt instruments.
Described by ECB board member Frank Elderson as a “work in progress”, the release contains three sets of indicators:
- experimental data on the issuance and holding of debt instruments with sustainability characteristics by residents in the euro area;
- data on the carbon emissions of financial institutions;
- and data on the physical risks of financial institutions’ loan and security portfolios.
Collectively, these indicators measure the sustainable finance efforts of financial institutions within the euro area, as well as their physical and transition risks from climate change.
The lack of high-quality climate-related data has been identified by the Network for Greening the Financial System as a major issue for identifying, mitigating and managing climate-related risks. Nonetheless, climate advocates have expressed concern about prioritising data collection and analytics over policy and regulation, encouraging regulators to adopt a precautionary approach to climate change and financial institutions’ climate risks.
The ECB noted that its indicators have limitations as a result of limitations in the data. For example, the assets included are a subset of total loan and securities in the euro area and the location and vulnerability of exposed activities may not be wholly accurate.
However, the ECB notes that the experimental sustainable finance data are “sufficiently reliable for use in the ECB’s economic analysis and monetary policy design”.
The ECB also said that much more relevant data will become available in the coming months, as several EU regulatory initiatives take effect, including the sustainable finance disclosure regulation and EU taxonomy regulation.
This page was last updated February 2, 2023
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