The ECB publishes indicators to assess the impacts of climate change on the financial and monetary sector

The European Central Bank (ECB), in collaboration with experts from national central banks, including the Bank of Italy, has published a set of indicators to assess the impact of climate risks on the financial sector and to monitor the development of sustainable finance.

The indicators are classified as 'experimental' or 'analytical': the former comply with many, but not all, of the quality requirements of official ECB statistics; the latter have significant limitations in terms of representativeness of the information and should therefore be used with caution. For further details on this subject, please see the methodological documentation annexed to the indicators.

More specifically, the indicators cover three areas: sustainable finance, climate-related transition risks, and climate‑related physical risks.

  1. Experimental indicators on sustainable finance provide an aggregate overview of sustainability‑linked debt instruments issued or held by euro-area residents.
  2. Analytical indicators on transition risks provide information on the exposure of intermediaries to transition risks, using data on financed carbon emissions and the carbon intensity of securities and loans held in portfolios.
  3. Analytical indicators on physical risks analyse the impact of extreme natural events related to climate change - such as floods (river and coastal), wildfires, landslides, erosion, windstorms and water stress - on the performance of the portfolios held by financial institutions. Companies affected by extreme events might find it difficult to service their debts, or the assets placed as collateral might fall in value, with negative repercussions on the financial system.

The dissemination of these indicators is part of the ECB's climate action plan.