ECB 2023 climate review of corporate bond portfolios

14 minute read

The ECB has owned corporate bonds as part of its asset purchase programmes since 2016, and the size of its portfolio compared to the size of the market has made its flows a significant driver of prices.

Since 2021 the European Central Bank (ECB) has considered climate change in the management of its corporate bond portfolios. In early 2023 it announced that an active reshuffling would be considered to achieve the climate goals.

In this note we analyse firstly whether ECB has been successful at reducing the climate impact of its corporate bond portfolio, and how active it has been in that realignment. We also analyse any impact on the bond pricing of the heavy emitting companies in the portfolio.

Overall, we found that the change in climate footprint in 2023 was minimal. The headline reduction in emissions intensity is just under 5%; however, adjusting for bond redemptions, the reduction is only 1.5%.

Where the ECB decided against participating in new issues, this did not lead to a material underperformance of the spreads of those companies.

Since the ECB’s active reshuffling seems yet to have happened, we expect to see a greater impact on the prices of high-emitting issuers in 2024 if it delivers on its public commitments.

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