ECB and Eurosystem portfolio carbon emissions keep falling in 2025 despite portfolio runoff

The European Central Bank published its fourth set of climate-related financial disclosures, showing that emissions from Eurosystem monetary policy portfolios and ECB foreign reserves continued to decline in absolute terms in 2025. The drop was mainly driven by a 13% portfolio runoff, which means the ECB can no longer tilt reinvestments toward better-performing issuers. Future reductions now depend on issuers cutting their own emissions. The ECB introduced inflation-adjusted emissions metrics for the first time to correct for how rising prices can overstate real decarbonization progress. It also disclosed scope 3 emissions for non-sovereign holdings and reported that green bonds now make up 33% of its own funds portfolio, with a target of 35% in 2026. The reports cover monetary policy portfolios, foreign reserves, the staff pension fund, and nature-related risks.