A “climate factor” will be introduced in 2026 by the Frankfurt -based institution to encourage banks to favor sustainable assets.
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It is a new sign of global warming. The European Central Bank (ECB) said on Tuesday July 29, wishing to take into account the climate risk in its rules of banks. During 2026, the Frankfurt -based institution will introduce a “Climate factor” which may reduce the value of certain financial securities used as a guarantee in exchange for loans, explains a press release.
The purpose of this climate factor to act as a “buffer” to protect monetary policy in the face of “The potential financial impact” Linked to climatic uncertainties, explains the text in particular. When the banks are asking for a loan from the ECB, providing securities as guaranteed, some of these titles deemed risky from a climate change point of view will then be less well valued by the ECB.
This policy is part of the BCE’s broader strategy to integrate the climate into its action. The institution has been putting pressure on banks since 2020 so that they identify and manage climatic risks with their borrowing customers.
