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Climate and collateral: the design and scope of the Eurosystem’s climate factor

Author

Listed:
  • Serrano Rodriguez, Enrique
  • Barmes, David
  • Nino Corredor, Alejandra

Abstract

Central banks are increasingly integrating climate considerations into collateral frameworks, with the climate factor proposed by the European Central Bank (ECB) representing the most recent and novel development in this space. Scheduled for implementation in June 2026, the climate factor introduces adjustments to collateral valuations based on assets’ exposure to uncertainties around the low-carbon transition. We examine the climate factor’s design and scope, outlining the riskbased case for extending it to credit claims, asset-backed securities (ABS), covered bank bonds and sovereign bonds.

Suggested Citation

  • Serrano Rodriguez, Enrique & Barmes, David & Nino Corredor, Alejandra, 2026. "Climate and collateral: the design and scope of the Eurosystem’s climate factor," LSE Research Online Documents on Economics 138616, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:138616
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    File URL: https://researchonline.lse.ac.uk/id/eprint/138616/
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    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • N0 - Economic History - - General

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