ECB to extend use of climate factors in Eurosystem collateral framework to non-financial corporate credit claims

The European Central Bank (ECB) has decided to extend the application of climate factors in its collateral framework to eligible credit claims from non-financial corporations. This measure, announced on 24 July 2026, aims to protect the Eurosystem against potential declines in collateral value caused by climate-related transition shocks, such as policy changes, technological shifts, or litigation. The climate factor will be based on an asset-level uncertainty score combining sector-level stress test data, the debtor's transition risk exposure, and the residual maturity of the credit claim. The maximum additional reduction in collateral value is capped at 5%. Implementation is expected by the end of 2027 at the earliest, with annual updates to climate factor values. This builds on a similar framework for marketable assets introduced in July 2025 and effective from June 2026.