The European Central Bank will apply climate factors to non-financial corporate debt as collateral starting end-2027 to mitigate transition risks.
The European Central Bank will extend climate-related risk adjustments to non-financial corporate credit claims within its collateral framework. The move aims to shield the Eurosystem from potential declines in collateral value due to climate transition shocks, such as policy changes or technological shifts.
This decision follows the July 2025 approval of climate factors for marketable assets, which took effect in June 2026. The new measure will be implemented by the end of 2027, with annual updates to climate factor values. The ECB stated the extension strengthens risk management amid financial uncertainties tied to the green transition.
Collateral used in refinancing operations may face unexpected climate-related risks, including litigation or macroeconomic adjustments. The ECB’s framework seeks to enhance resilience in monetary policy implementation by accounting for these factors.