ECB will consider ‘climate factor’ when lending to banks from next year
Each asset pledged as collateral will be value-assessed based on climate vulnerability.
The European Central Bank (ECB) is introducing a ‘climate factor’ which could reduce the value of collaterals pledged by banks for loans, starting in the second half of 2026.
ECB says the new measure will allow it to better manage the financial risks related to the climate crisis by protecting Eurosystem, the eurozone’s monetary authority, against potential decline in the value of collateral in case of adverse climate-related transition shocks.
