On 24 July 2026, the European Central Bank  (“ECB“) announced that it will extend the use of climate factors within the Eurosystem collateral framework to certain eligible credit claims involving non-financial corporations. The measure aims to strengthen the Eurosystem’s risk management framework and address uncertainties associated with the green transition. The full announcement is available at this link.

The decision builds on the introduction of climate factors for non-financial corporate bonds, which became effective in June 2026. According to the ECB, climate policy changes, technological developments, litigation risks and shifts in consumer behaviour may significantly influence collateral values.

The climate factor will be calculated using sector-level stress indicators, the debtor’s exposure to transition risks and the residual maturity of the asset. The additional reduction applied to collateral values will be capped at 5%, with implementation expected no earlier than the end of 2027.