Climate change, and nature and biodiversity loss have an impact on economic variables such as growth, price stability and fiscal space. Bundesbank analyses show that these developments pose new challenges for the financial system (see Focus chapter). The Bundesbank will therefore continue to integrate climate, nature and biodiversity-related aspects into its analyses. Moreover, it will further refine its own sustainability strategy and derive objectives from this for the individual core services and functions. In addition, it will build out its training and outreach activities regarding climate and nature-related risks. The Bundesbank continues to advocate for a sustainable economic and financial system on national and international committees like the SFC and the NGFS. 

All Eurosystem members strive to ensure that the non-monetary policy portfolios under their management are on a path that supports the goals of the Paris Agreement and the EU’s climate neutrality objectives as set out in the European Climate Law. This consists in setting at least one broadly defined long-term target covering all NMPPs under management control of the central bank, that is aligned with the goals of the Paris Agreement and the EU’s climate neutrality objectives.

Within the scope of its statutory mandate, the Bundesbank strives to incorporate climate and sustainability-related aspects into its own investment decisions as part of the efforts towards achieving the goals of the Paris Climate Agreement as well as the climate neutrality goals of the Federal Republic of Germany and the EU. Such aims must consistently align with the essential objectives of the Bundesbank’s financial investments, which may be associated with certain restrictions. For instance, it lies in the nature of foreign currency portfolios, as part of the reserve assets, that they are concentrated on specific currencies as well as secure and liquid forms of investment. Owing to its existing composition and design, the euro portfolio offers only limited scope for directly managing or reducing the associated emissions. However, a possible realignment of the investment strategy 1 could – subject to the primary objective of the portfolios – create opportunities for greater quantitative consideration of climate and sustainability objectives.

The Bundesbank considers market transparency through climate-related and nature-related disclosures to be essential for analysing and managing the relevant risks to both the financial system as a whole and its own balance sheet. Over the short to medium term, the Bundesbank advocates for improvements in the availability and quality of sustainability data, particularly data on the scope 3 emissions of financial institutions and nature-related data. By taking the lead in various climate and other sustainability data procurement projects for the ESCB, the Bundesbank makes a vital contribution towards ensuring that ESCB members have access to sustainability data that meet the highest quality standards and are as comprehensive and granular as possible. This is another reason why the Bundesbank closely monitors developments in the quality and availability of data. As part of its committee work, the Bundesbank advocates to ensure consistency of disclosure requirements and focus on decision-relevant data. 

Against this backdrop, the Bundesbank strives to refine its analytical activities as well as the sustainable investment strategies for the euro portfolio and the foreign currency portion of the reserve assets. In this context, the Bundesbank’s annual climate-related disclosures play an important role in monitoring and documenting its progress.