ECB to buy sustainability-linked bonds

22 Sep 20

The European Central Bank will allow itself to buy bonds with coupons linked to sustainability performance targets from next year, it has said, also announcing that these bonds will be eligible as collateral.

 

Such targets must relate to one of more of the EU taxonomy regulation objectives or the UN Sustainable Development Goals, the bank said.

“This further broadens the universe of Eurosystem-eligible marketable assets, and signals the Eurosystem’s support for innovation in the area of sustainable finance,” the ECB said in a statement.

The taxonomy regulation came into force in July, with the EU seeking to establish which economic activities and investments can be classified as environmentally sustainable.

Its objectives include climate change mitigation or adaptation; sustainable use and protection of water and marine resources; the transition to a circular economy (in which the value of materials and resources is maintained for as long as possible); pollution prevention; and protecting or restoring biodiversity.

The SDGs are 17 targets adopted by all UN members in 2015, including on issues such as the environment, peace and justice, education, social and economic inequality, health and hunger.

The change will apply from 1 January 2021.

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