ECB to Extend Climate Factors in Collateral Framework to Non-Financial Corporate Credit Claims
The European Central Bank (ECB) Governing Council has decided to extend the use of climate factors in the Eurosystem collateral framework to eligible credit claims from non-financial corporations. This measure aims to protect the Eurosystem against potential declines in collateral value due to climate-related transition shocks, such as policy changes, technological shifts, and litigation. The climate factor will be based on an asset-level uncertainty score incorporating sector-level stress test data, debtor exposure to transition risks, and residual maturity. The maximum additional reduction in collateral value is capped at 5%. Implementation is expected by end-2027 at the earliest, with annual updates to climate factor values. This builds on a July 2025 decision for marketable assets that took effect in June 2026.
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