ECB Releases New Climate-Related Statistics to Help Close Data Gap

The European Central Bank has unveiled a set of climate-related statistical indicators to help monitor the impact of global warming on the financial sector and track developments in sustainable and green finance. This is the first time the ECB has released such indicators, and they will help to provide a better understanding of the risks and opportunities posed by climate change.

The new gauges are either experimental or analytical, the ECB said on Tuesday. It cautioned that the former comply with “many, but not all” of its standards. The analytical measures meanwhile have a lower quality and “certain – sometimes significant – limitations.”

"The indicators are a first step to help narrow the climate-data gap, which is crucial to making further progress toward a climate-neutral economy," Executive Board member Isabel Schnabel said in the statement. "We need a better understanding of how climate change will affect the financial sector, and vice versa. For this, the development of high-quality data is key."

The new statistics are a milestone for the ECB's plan to incorporate climate-change considerations into its policy framework. The ECB outlined its ambition to do this last July, and in October it started tilting reinvestments of maturing corporate bonds toward issuers with a greener footprint.

Schnabel has suggested that the ECB may need to start actively reshuffling its bond holdings to better reflect climate risk. In a speech this month, she said that this could help the ECB to achieve its goals.

She also argued that the ECB should consider greening its debt portfolio to include sovereign bonds. She identified targeted lending operations as a potential future instrument that could be used to expand policy again.

Under President Christine Lagarde, the ECB has refocused efforts on how to contribute to the fight against global warming and to start a broader conversation on improving the observation of climate-related risks and the green transition. The ECB is committed to playing its part in tackling the climate crisis and supporting the transition to a green economy. We are working to increase our understanding of climate-related risks, and to ensure that these are taken into account in our decision-making. We are also engaging with other central banks and financial institutions on how best to address the challenges posed by climate change.

The new indicators are based on publicly available data where possible, the ECB said. This ensures that they are accessible and replicable. The indicators cover three areas:

According to the ECB, the volume of sustainable and green bonds in the euro area has more than doubled over the past two years and has grown much faster than the overall bond market.

Most emissions that are financed by equity or bonds are held by investment funds, while the most carbon-intensive activities that are financed via bank lending tend to be the most polluting.