FRANKFURT (Reuters) -The European Central Bank will add climate change considerations to its lending operations from next year, potentially reducing the value of collateral if the underlying asset is deemed risky to climate-related shocks, it said in a statement on Tuesday.
“The Governing Council has decided to introduce a ‘climate factor’ which could reduce the value assigned to eligible assets pledged as collateral, depending on the extent to which an asset can be impacted by these uncertainties,” the ECB said in a statement.
“This acts as a buffer against the possible financial impact of uncertainties related to climate change,” the ECB said, adding that the measure is due to be implemented in the second half of 2026.
(Reporting by Balazs Koranyi; Editing by Andrew Heavens)
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