The Riksbank reports the carbon footprint for its holdings of corporate bonds
Economic Commentaries, News The Riksbank is now taking a first step towards reporting its own climate-related risks on the Riksbank’s balance sheet. By calculating and reporting the carbon footprint of the corporate bond holdings, the Riksbank wishes to help promote transparency with regard to climate-relate information. In an Economic Commentary, the authors describe how the Riksbank calculates the carbon footprint. The authors also highlight the importance of companies reporting their climate-related risks and opportunities in line with the recommendations from the Task Force for Climate-related Financial Disclosures (TCFD).
The role of central banks in the environment and climate issue is now being discussed globally. A starting point for the work of central banks is that environment and climate-related risks are a source of financial risks that do not merely affect the analysis of economic development and financial stability, but also the central bank’s own balance sheet.
If we are to be able to manage climate-related risks, more and better reporting of climate-related information and data is needed. It is therefore important for companies to start reporting in line with the TCFD recommendations as soon as possible. Only once there is access to uniform, comparable and reliable climate-related information can risks be priced correctly and investors invest their capital effectively.
Since January 2021, the Riksbank has actively tried to limit the sustainability risks – including climate-related risks – posed by the purchases of corporate bonds. This means that the Riksbank only purchases bonds issued by companies deemed to comply with international standards and norms for sustainability. By calculating and reporting the carbon footprint in its holdings of corporate bonds, the Riksbank is taking a first step towards reporting the climate risks on the balance sheet.
In the Economic Commentary “Sustainability reporting - need for greater standardisation and transparency”, the authors describe how the Riksbank calculates the carbon footprint of its portfolio of corporate bonds. The Commentary also describes how sustainability reporting is developing and highlights the need for more and better reporting of climate-related information. The carbon footprint for the Riksbank’s holdings of corporate bonds will be published on the Riksbank’s website at the end of each quarter.
By Johan Blixt, Emma Brattström and Maria Ferlin, who work at the Markets Department and the Financial Stability Department of the Riksbank.