Annual report on sustainable investments and climate-related risks for 2025
The Annual report on sustainable investments and climate-related risks describes the results achieved by Banca d'Italia in integrating environmental, social and governance (ESG) factors into the management of its investments in 2025. The investments covered by this Report include the Bank's financial portfolio, foreign currency reserves, and the Supplementary Pension Fund for its staff.
The analysis of climate-related and biodiversity risks complies with the Eurosystem's harmonized reporting principles. The metrics and methodologies are based on the current state of the debate, the latest data available, and current legislation; therefore, they may evolve in line with the progress made in this area.
This year's edition of the Report introduces some important changes: (a) a more streamlined chapter structure; (b) the identification of 2019 as the base year when discussing climate metrics; and (c) the addition of carbon footprint and weighted average carbon intensity (WACI) indicators based on Scope 3 emissions.
Banca d'Italia's commitment to sustainable investment
Banca d'Italia's investment strategy aims to combine its financial and sustainability objectives. The financial objectives relate to risk containment, search for returns and, in the case of foreign currency reserves, maintaining a high degree of liquidity. The sustainability objectives consist in reducing the environmental and climate impacts of the investments, as well as promoting corporate social responsibility and the best corporate governance standards.
Investment management
Sustainability criteria are integrated both into the investment process and into risk control.
The Bank has adopted specific sustainable investment strategies for each asset class in which the portfolios are invested. For investments in equities and corporate bonds, exclusions are applied based on compliance with international treaties on labour and on controversial weapons, and in relation to tobacco production. The selection of securities favours firms with the best ESG practices and those most committed to the climate transition. The strategy for investing in government securities focuses on the purchase of green bonds.
Risk control involves a system of indicators that makes it possible to identify exposures to issuers with inappropriate sustainability practices and to monitor portfolio transition risk.
Targets and metrics
In compliance with its institutional mandate, Banca d'Italia is committed to reviewing its investment strategies regularly to ensure that the strategy adopted pursues both the Paris Agreement's goals and the European Union's target of carbon neutrality by 2050.
The climate data for 2025 are in line with those for 2024 and confirm limited exposure to transition risk for equities and corporate bond investments, both in the financial portfolio and in the Supplementary Pension Fund.
Compared with 2019, the year prior to the full application of sustainability criteria to investment management, the carbon footprint and WACI of these asset classes declined significantly owing to the Bank's investment choices, which favour firms with the best sustainability practices, and to the progress made by firms in reducing emissions. The reduction in the WACI is also due to inflation, which, by increasing the face value of the revenue in the denominator, other factors being equal, reduces the indicator.
The share of green government bonds in the financial portfolio reached 5.8 per cent, equal to a face value of around €7 billion.
Instagram
YouTube
X - Banca d'Italia
Linkedin
RSS
E-mail Alert
