Central Banks

Deutsche Bundesbank Deutsche Bundesbank

The Bundesbank, along with other national banks and the European Central Bank (ECB) make up the eurosystem. The ECB published its first climate action plan in 2021, and has since revealed it is considering introducing climate capital rules and bank portfolio restrictions.

While the eurosystem as a whole is progressing more quickly on climate than many central banks in the G20, the Bundesbank has sometimes been seen as an obstacle to action by the ECB.

This may be beginning to change, with the central bank dropping its opposition to greening the eurosystem’s monetary policy operations, and moving to procedure data on companies’ climate impacts.

Climate action

  • The ECB has developed a climate action plan.

  • The Bundesbank procured data on companies’ climate impacts, to be used by eurosystem central banks to green their balance sheets, and to support their regulatory functions.

  • The ECB has launched a climate stress test.

Climate inaction

  • The Bundesbank has historically opposed climate action by the ECB.

  • The eurosystem’s corporate bond purchases and collateral framework have been found to have a carbon bias.

  • The Bundesbank has yet to apply climate criteria in its own investments.

Joachim Nagel

Governor

Term of appointment

2022-2030

Link to biography

How the Deutsche Bundesbank stacks up

Rank Country Aggregate Score (out of 130) Grade (A+ to F) Research and Advocacy (out of 10) Monetary Policy (out of 50) Financial Policy (out of 50) Leading by Example (out of 20)
3 GermanyGermany 60 C+ 10 12 30 8

Central Bank/Supervisor

Deutsche Bundesbank, European Central Bank and European Banking Authority

More info

Research & Advocacy

10 out of 10

High-impact

  • N/A

Medium-impact

  • Bundesbank is an NGFS member

Low-impact

Monetary Policy

12 out of 50

High-impact

  • N/A

Medium-impact

Low-impact

  • Advanced ESG data model in the Centralised Securities Database (CSDB), identifying all types of sustainable bonds; will rank sustainability level as “self labelled”, “verified by a second party” and “fully certified”

  • ECB accepts sustainability-linked bonds as collateral

  • ECB will make environmental sustainability disclosures a condition of eligibility in collateral purchases (formal commitment, implementation in 2026)

  • ECB will make environmental sustainability disclosures a condition of eligibility in the corporate sector purchase programme (formal commitment, implementation in Q1 2023)

  • ECB purchased green bonds under both the corporate and public sector purchase programmes

  • Climate change risks incorporated into haircuts applied to corporate bonds used as collateral (under discussion at ECB)

  • Eurosystem will implement a set of common minimum standards for how national central banks’ in-house credit assessment systems should include climate-related risks in their ratings (formal commitment, implementation in 2024)

Financial Policy

30 out of 50

High-impact

  • Climate-related quantitative and qualitative restrictions on banks’ portfolios (under discussion at ECB)

Medium-impact

Low-impact

Leading by Example

8 out of 20

High-impact

  • N/A

Medium-impact

  • N/A

Low-impact

  • Sustainable investment policies in Bundesbank’s euro- denominated non-monetary policy portfolio includes tilting based on carbon risk rating and greenhouse gas intensity

  • Disclosure of Bundesbank’s progress towards operational environmental goals in environment reports

  • Education for young people, high-school teachers and students, and university students on climate-related financial risk and green finance within Bundesbank, and at Euro20+ events

  • Eurosytem’s BIS innovation hub to build a database of corporate climate-related disclosures (formal commitment)

  • Green finance dashboard hosted by Bundesbank; tracks national emissions and green finance metrics

  • Eurosystem has contracted ESG rating agencies Carbon4 and ISS ESG to integrate climate risk into the non-monetry policy portfolio

  • Climate-related disclosures of euro-denominated non-monetary policy portfolios by Deutsche Bundesbank (2022 results)

  • Creation of green finance steering committee

  • Contributed to the development of the EU taxonomy; scorecard points suspended due to inclusion of gas

  • Internal environmental policy

What steps are missing in the Deutsche Bundesbank toolbox to address climate risk?

Civil society expects the bank to do the following:

  • Along with the rest of the eurosystem, fully decarbonise its collateral framework and asset purchases.

  • Follow the Banque de France’s example in committing to phase out its fossil fuel investments.

  • Adjust its refinancing operations in line with the 1.5°C targets of the Paris Agreement.

  • Ensure its responsible investment charter is fully aligned with the Paris goals.

  • Support development and implementation of macroprudential measures to align financial flows with the Paris agreement.

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