First climate-related disclosure of Banka Slovenije’s own financial assets
Central banks are among the largest institutional investors, and it is important that we integrate socially responsible and sustainable factors into our investment frameworks. Thus, in line with other Eurosystem central banks, we at Banka Slovenije have significantly increased the share of our own investments in green, social and sustainable bonds over the last five years (from less than 1% to more than 7%). At the same time, we have set ambitious targets for the coming years to further increase such investments and reduce the carbon footprint of our investments in private sector issuers. In line with the EU's climate neutrality strategy, our long-term target is to strive to approach net-zero greenhouse gas emissions of our own investments by 2050 as much as possible.
This is the first report in which Banka Slovenije publishes detailed climate-related information in connection with our own financial assets. It represents the first step towards increased transparency regarding climate-related risks and opportunities related to our financial assets. Apart from being transparent, we also aim to raise public awareness and understanding of climate risks and opportunities. For this purpose, a reporting framework was developed within the Eurosystem, which we at Banka Slovenije further enhanced.
Progress in the last five years
We have been following a socially responsible and sustainable investment framework for managing our own financial assets for several years. With our own investments remaining virtually unchanged (around EUR 3.8 billion at the end of 2022), we have significantly increased our investments in green, social and sustainable bonds: from EUR 32 million in 2018 (less than 1% of our total investments), we have increased them to almost EUR 280 million by the end of 2022 (more than 7% of our financial investments). Green bonds account for the largest share at almost 70%, followed by social bonds at 26% and sustainable bonds at 4%.
At the same time, as from 2020, we are excluding certain companies from the list of eligible corporate bond issuers, i.e. companies in the tobacco and arms industries and those linked to corruption, major environmental damage or human rights violations.
Chart: Investments in green, social and sustainable bonds
Source: Bloomberg, BS calculations.
Banka Slovenije’s targets for the following years
In line with the EU's climate neutrality strategy, our long-term target is to strive to approach net-zero greenhouse gas emissions of our own investments by 2050 as much as possible. In the future, we will therefore continue to strive to progressively improve the climate-related indicators of our financial investments.
To reach our long-term target, we set two medium-term objectives, to be achieved by the end of 2025: (i) we plan to increase our investments in green, social and sustainable bonds to at least EUR 400 million; (ii) we plan to visibly reduce the carbon footprint of our investments in the private sector issuers. This will be achieved by significantly tightening the criteria for companies to be included on the list of eligible non-financial corporate bond issuers and by setting carbon-lowering strategies for our other private sector investments..
For more details, see publication Climate-related disclosure of Banka Slovenije’s own financial assets, March 2023.