cross-posted from: https://scribe.disroot.org/post/3795786

• The European Central Bank (ECB) is set to introduce what it calls a 'climate factor' when lending to banks against appropriate collateral in their short and long-term financing instruments.
• This climate factor could reduce the value assigned to the assets pledged as collateral, thus protecting the Eurosystem against a potential decline in collateral value in the event of climate-related shocks.
• The climate factor also raises the pressure on commercial banks to direct their funds towards 'greener' investments as the bloc seeks to reduce it carbon footprint.
• The new measure will apply to marketable assets issued by non-financial corporations, taking effect in the second half of 2026.