BIS Launches Euro Green Bond Fund for Central Banks
BIS launched a EUR-denominated, open-ended fund for green bond investments by central banks and official institutions, following the launch of the first BIS green bond fund denominated in USD in September 2019. ECB has decided to use part of its own funds portfolio to invest in this second BIS euro-denominated green bond investment fund for central banks (EUR BISIP G2). With this investment, ECB is contributing, within its mandate, to global efforts to promote environmental objectives and combat climate change.
Together, the two BIS green bond funds will manage some USD 2 billion in green bonds for central banks with the expectation that the funds will continue to grow considerably. The two funds are structured according to the Swiss law and belong to the BIS Investment Pool (BISIP) family, a format commonly used by BIS Asset Management for its fixed-income investment products. They are managed in-house by the BIS Asset Management. Eligible bonds have a minimum rating of A– and comply with the International Capital Market Association's Green Bond Principles and/or the Climate Bond Standard published by the Climate Bonds Initiative. BIS also produces an annual impact report for investors based on the information provided by the issuers of the bonds in which the funds invest.
The two BIS funds have been developed with the support of an advisory committee drawn from a global group of central banks. They are part of the BIS green bond fund initiative, which helps central banks to incorporate environmental sustainability objectives in the management of their reserves and capital, in line with a growing demand for climate-friendly investments among official institutions. The funds promote green finance through sizable investments in environmentally friendly projects such as renewable energy production and energy efficiency and support the adoption of best market practices and reporting standards to deepen the green bond market. The ECB investment in the EUR BISIP G2 is part of the sustainable and responsible investment strategy of ECB, which targets an increase in the share of green securities in its own funds portfolio. Such investment complements direct purchases of green bonds in secondary markets. ECB already holds green bonds amounting to 3.5% of its own funds portfolio, with a total market value of EUR 20.8 billion. ECB plans to increase this share over the coming years.
Related Links
Keywords: International, EU, Banking, Green Bond Fund, Sustainable Finance, ESG, ECB, BIS
Previous Article
EIOPA Sets Out Principles for Liquidity Stress Test for InsurersRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.