Climate and collateral: the design and scope of the Eurosystem’s climate factor

Enrique Serrano Rodriguez, David Barmes and Alejandra Nino Corredor

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Central banks are increasingly integrating climate considerations into collateral frameworks, with the climate factor proposed by the European Central Bank (ECB) representing the most recent and novel development in this space. Scheduled for implementation in June 2026, the climate factor introduces adjustments to collateral valuations based on assets’ exposure to uncertainties around the low-carbon transition. We examine the climate factor’s design and scope, outlining the riskbased case for extending it to credit claims, asset-backed securities (ABS), covered bank bonds and sovereign bonds.

JEL-codes: F3 G3 N0 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2026-05-26
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:138616

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