Christine Lagarde speaking at a press conference in March 2022 © ECB
The European Central Bank (ECB) and Eurosystem portfolios are on track to meet their emission reduction targets, while the central bank is supporting the energy transition by increasing its investment in green bonds, according to the ECB’s latest financial disclosures.
The decline in emissions associated with the Eurosystem’s monetary policy portfolios and the ECB’s foreign reserves was mainly driven by the natural decline of maturing securities not being replaced – known as run-off – which fell by 13% in 2025, the ECB said.
The Eurosystem covers the ECB and the national central banks of the euro area.
The share of green bonds in the ECB’s own funds portfolio rose to 33% at the end of 2025 from 28% in 2024, equating to €7.6bn towards the green transition, with a plan to increase the share to 35% in 2026, the ECB said.
“Climate change and nature loss bring physical and transition risks for our own balance sheet. We are firmly committed to addressing these risks, chiefly by decarbonising our monetary policy corporate bond portfolios and incorporating a climate factor into our collateral framework,” ECB President Christine Lagarde said.
The ECB has added a climate factor into its collateral framework to better manage financial risk from climate change. The Bank of England (BoE) said last week it is taking a similar step.
Acceleration of the green transition
Lagarde noted that the report comes against a backdrop of geopolitical turbulence – including the war in the Middle East and the oil price shock it has triggered – which she said should accelerate the green transition and cut dependence on fossil fuels.
The ECB disclosures include a set of inflation-adjusted emissions metrics for the first time.
“This enhances transparency and responds to growing evidence that traditional emission metrics – unadjusted for inflation – can materially overstate the progress made in decarbonisation,” Lagarde said.
The report also discloses relative metrics for scope 3 emissions of non-sovereign holdings for the first time, which include all indirect emissions that occur in a company’s value chain.
And it includes data on the exposure of its portfolios to nature risk for the second year in a row, which the ECB said it planned to expand as nature-related data improves and reporting standards are developed in this area.
“Beyond climate, it is vital that we continue to recognise the critical link between nature and the economy. The ways in which nature degradation affects economies, price stability and bank portfolios, as well as how it exacerbates the effects of climate change, are becoming increasingly apparent,” Lagarde said.
She noted that ECB analysis shows that water-related stress can trigger cascading impacts across other ecosystems, with severe economic consequences.
This page was last updated June 17, 2026
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Emma Thomasson is a British journalist, consultant and trainer based in Berlin. She is an expert in economics, politics, business and technology. She previously worked for Reuters as a correspondent and bureau chief in Germany, Switzerland, the Netherlands, South Africa and the UK.
