Climate change and the transition to a more sustainable economy affect the outlook for price stability through their impact on macroeconomic indicators such as inflation, output, employment, interest rates, investment and productivity; financial stability; and the transmission of monetary policy. Moreover, climate change and the transition to a low-carbon economy affect the value and the risk profile of the assets held on the Eurosystem’s balance sheet, potentially leading to an undesirable accumulation of climate-related financial risks.
Consequently, the Eurosystem is implementing an action plan to continue to incorporate climate considerations into its monetary policy framework:
- The Eurosystem´s Action Plan
- Corporate sector asset purchases
- Collateral framework
- Disclosures as a requirement for eligilibity as collateral and asset purchases
- Statistical data for climate change-related risk analyses
- Enhancement of risk assessment capabilities
- Macroeconomic modelling and assessment of implications for monetary policy transmission
Decisions taken
- ECB takes further steps to incorporate climate change into its monetary policy operations
- ECB provides details on how it aims to decarbonise its corporate bond holdings
- ECB presents action plan to include climate change considerations in its monetary policy strategy
- Detailed roadmap of climate change-related actions
- ECB to accept sustainability-linked bonds as collateral
Documents of interest
- Climate change and monetary policy. Contribution by Isabel Schnabel, Member of the Executive Board of the ECB, to the International Monetary Fund’s magazine Finance and Development
- Climate change and monetary policy: initial takeaways (NGFS)
- Survey on monetary policy operations and climate change: key lessons for further analyses (NGFS)
- Adapting central bank operations to a hotter world: Reviewing some options (NGFS)