Bundesbank includes gold analysis in latest climate disclosures

June 24, 2024|Written by |Deutsche Bundesbank

Germany’s Bundesbank has hailed a drop in the greenhouse gas emissions of its euro portfolio and bond holdings in its latest climate-related disclosure, a report that includes what appears to be the first attempt by a central bank to analyse the environmental impact of its gold reserves. 

The 2024 disclosure report, the third of its kind released by the Bundesbank, also marks the first time it has examined the potential impact of physical climate risks such as rising sea levels on those countries whose bonds it holds as part of its foreign currency reserves. 

In a foreword to the report, the Bundesbank notes the impact of climate change on its key mandate of maintaining price stability. But it also notes: “Our own balance sheet may also be exposed to climate risks. Regular analysis and disclosure of these risks is an important step towards better protecting our balance sheet from them.”

The report points to a continued drop in the weighted average carbon intensity (WACI) of the Bundesbank’s bond investments since 2015, a reflection of the integration of environmental considerations into the central bank’s investments strategies.  

Both the carbon footprint (762 tonnes of CO2 equivalent, or tCO2e) and WACI (0.81 tonnes per million euros of gross income) of the euro portfolio have also declined for a third consecutive year, notably due to steep drop in scope 2 emissions – those linked to purchased electricity.  

“The euro portfolio is roughly half as [greenhouse gas]-intensive compared with the average of the 39 largest European banks by market capitalisation according to the STOXX Europe 600 Banks stock index,” the report says.

However, insufficient data on financed emissions – those that can be attributed to the activities resulting from banks’ investments – “means that the available metrics are only partially meaningful”, it notes. 

The analysis of the gold reserves is based on data from the present-day gold industry due to a lack of information available about when, and under what conditions, the bars in the Bundesbank’s vaults were mined and melted. 

This method resulted in an estimated carbon footprint of between 52.8 and 90.8mn tCO2e for the Bundesbank’s 3,353 tonnes of gold.

The gold reserves were built up between the 1950s and early 1970s as a result of currency crises during the Bretton Woods monetary system as well as current account surpluses.

“Given such a long and continued use, the Bundesbank’s gold holdings provide a more [greenhouse gas]-efficient store of value than conventional securities investments,” the report notes. 

The Bundesbank’s actions on the climate are receiving an attention boost following the appointment of Sabine Mauderer, a member of its executive board, as chair of the Network for Greening the Financial System at the start of this year.

“Going forward, the Bundesbank will continue to actively promote transparent climate-related disclosures and take account of the consequences of climate change and climate policy in the management of its non-monetary policy financial investments,” the report says. 

“It is the Bundesbank’s endeavour to address climate-related financial risks and to incorporate the objectives of the Paris Climate Agreement in its mandate.”

This page was last updated June 24, 2024

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