On 27 March, the National Bank of Belgium published for the second time climate-related financial disclosures for its non-monetary policy portfolios, reiterating its commitment to sustainable and responsible investment (SRI) and the transition to a net-zero economy.

Such disclosures are key to increasing awareness and understanding of climate-related risks and opportunities; disclosure is in fact one of the five pillars of the Bank’s SRI Charter. The report sheds light on the greenhouse gas emissions associated with the Bank’s own investment portfolios and forms part of an annual reporting cycle intended to further the Bank’s efforts to inform external stakeholders on climate-related issues.

One of the most important developments over the past year was the Bank’s decision to adopt an EU climate transition benchmark (EU CTB) index for its externally managed equity portfolio. This will help to minimise greenwashing risks as the label requires, for example, a minimum reduction in annual portfolio carbon emissions and the exclusion of investments from issuers that undermine ESG objectives, such as those dealing in controversial weapons or breaching the principles of the UN Global Compact. This decision allowed the Bank to set an intermediate climate-related target for this portfolio: the Bank aims to reduce the portfolio’s carbon footprint by 50% by 2030.[1]

The report also explains how the Bank is making progress towards achieving its SRI targets. For instance, the Bank committed to a gradual increase in the share of thematic bonds in its aggregate bond portfolio, a promise on which it delivered as this share rose to 12.3% in 2023 (up from 10.0% in 2022 and 6.6% in 2021). By investing in so-called thematic assets, such as green, social and sustainability bonds, the Bank helps to finance the transition to a sustainable and inclusive net-zero economy. In addition, in 2023, the Bank updated its screening rules for new purchases.

Of course, the report also lays out how financed emissions evolved in 2023. A general downward trend in carbon footprint emerges from the comparison between 2023 and the baseline year 2021. This reduction was particularly pronounced for (sub-)sovereign bonds, for which the carbon footprint decreased by around 20% over that period. It is interesting to note that data coverage has improved over the years, particularly for supranational and agency bonds.

Building on the progress made thus far, the Bank aims to further anticipate ESG risks and support the climate transition. With this goal and its broader mandate in mind, the Bank will continue its efforts, including within the Eurosystem and the Central Banks and Supervisors Network for Greening the Financial System, to, for example, develop intermediate climate-related targets for additional portfolios.

_{[1] The reference year is 2021.}