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2025-07-29 18:08:28
[Eurozone Financial Upheaval: ECB Introduces "Climate Factor," Banks' Green Transformation Imperative] ⑴ The ECB announced that it will incorporate climate change considerations into its lending operations starting at the end of 2026. ⑵ This measure aims to pressure banks to direct financing toward greener sectors to support the eurozone's carbon reduction targets. ⑶ The ECB announced that it will introduce a "climate factor" that may reduce the valuation of eligible collateral based on the extent to which the asset is exposed to climate uncertainty. ⑷ This new policy, expected to take effect in the second half of 2026, aims to provide a buffer against the potential financial impact of climate change-related uncertainties. ⑸ Unlike the US Federal Reserve's withdrawal from the Global Climate Risk Initiative, the ECB has further strengthened its commitment to climate risk. ⑹ The ECB has previously urged commercial banks to disclose more climate-related risks and has warned of fines for non-compliant banks. ⑺ The ECB's new "climate factor" will focus on tradable assets issued by non-financial corporations and specific adverse events related to the green transition.
