The European Banking Federation (EBF) is demanding transparency from the European Central Bank (ECB) regarding the methodology used to calculate the 'climate factor'. This factor introduces additional discounts, or haircuts, to the value of collateral assets based on their exposure to low-carbon transition risks.
The initiative was announced on July 29, 2025, and became effective for corporate bonds on June 15, 2026. The ECB intends to extend this mechanism to eligible corporate credit claims by the end of 2027 at the earliest, with a maximum additional collateral value reduction of 5%.
On September 9, 2026, banks expressed public concern over the lack of disclosure. Denisa Avermaete of the EBF stated that the banking sector requires visibility into these calculations to effectively manage liquidity and collateral strategies.
The ECB maintains that these adjustments are based on broad sector-level stressors rather than individual company assessments. This approach moves the central bank's climate integration from portfolio preferences, which began in 2022, to direct risk pricing.
