ECB has decided that bonds with coupon structures linked to certain sustainability performance targets will become eligible as collateral. The bonds will become eligible as collateral for the Eurosystem credit operations and for the Eurosystem outright purchases for monetary policy purposes, provided they comply with all other eligibility criteria. The coupons must be linked to a performance target referring to one or more of the environmental objectives set out in the EU Taxonomy Regulation and/or to one or more of the United Nations (UN) Sustainable Development Goals related to climate change or environmental degradation. The decision applies from January 01, 2021.
Non-marketable assets with comparable coupon structures are already eligible. This decision aligns the treatment of marketable and non-marketable collateral assets with such coupon structures. This development further broadens the universe of Eurosystem-eligible marketable assets and signals the support of Eurosystem for innovation in the area of sustainable finance.
Keywords: Europe, EU, Banking, Collateral, Sustainability Linked Bonds, Taxonomy Regulation, Climate Change Risk, ESG, Sustainable Finance, UN Sustainable Development Goals, Regulation 2020/852, ECB
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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