Strengthening socially responsible and sustainable investment at Banka Slovenije

Like other central banks, Banka Slovenije incorporates social responsibility and sustainability factors into its investment frameworks, thereby pursuing the EU’s climate neutrality strategy and implementing the strategy of socially responsible and sustainable investing that Banka Slovenije put in place last year. Recent years have seen us already hit our ambitious targets, and strengthen our holdings of green, social and sustainable bonds from EUR 32 million in 2018 to EUR 450 million at the end of 2023. We also reduced the carbon footprint of our holdings of non-financial corporate bonds by approximately 40% in 2023. Banka Slovenije has also set itself ambitious targets for the years ahead. 

We adopted a strategy of socially responsible and sustainable investing in March 2023, which includes long-term and medium-term environmental targets. Accordingly we publish climate-related disclosures of our own financial assets each year. The aim is to contribute to greater transparency with regard to climate risks and opportunities within the framework of Banka Slovenije’s own financial assets, and at the same time to increase public awareness and understanding with regard to climate risks.

Holdings of green, social and sustainable bonds

We have been pursuing a socially responsible and sustainable investment framework in the management of our own financial assets for some years now. The last six years have seen us sharply increase our holdings of green, social and sustainable bonds. Holdings of bonds of this kind amounted to EUR 32 million at the end of 2018, or less than 1% of our total financial assets, but almost EUR 450 million at the end of 2023, equivalent to more than 10% of our total financial assets.

Figure: Holdings of green, social and sustainable bonds

Sources: Bloomberg, Banka Slovenije calculations

In 2023 we also updated and significantly tightened the criteria for excluding firms from the list of eligible issuers. We also reduced the carbon footprint of our holdings of non-financial corporate bonds by approximately 40% in 2023 relative to 2022. Having regard for the recommendations of the EU benchmarks aligned with the Paris Agreement, we have ceased investing in carbon-intensive firms and firms in carbon-intensive sectors who fail to make environmental disclosures, while continuing to exclude firms in the tobacco industry and arms industry. We also intend to gradually sell off our existing holdings in such issuers by the end of 2025.

Banka Slovenije targets for the years ahead

In accordance with the EU climate neutrality strategy, it is our long-term target to come as close as possible to net zero greenhouse gas emissions in our own assets by 2050. We will thus continue working to gradually improve the climate-related metrics of our financial assets.

To hit our long-term target we are pursuing two medium-term targets that we intend to meet by the end of 2025: (i) we will further increase our holdings of green, social and sustainable bonds to at least EUR 600 million; and (ii) we will continue reducing the carbon footprint of our holdings in private-sector issuers, i.e. corporate bonds (financial and non-financial), covered bonds and shares.