According to the Bundesbank’s latest climate-related disclosures, the Bank further expanded its climate-related and nature-related work in 2025. This work includes analysing the financial system’s vulnerabilities to climate-related risks, for example. Through its climate-related disclosures, the Bundesbank aims to help improve transparency about climate-related risks and impacts in the financial sector. To this end, it also discloses the climate performance of its own financial investments. For the first time, it has analysed the GHG emissions financed by commercial banks (part of scope 3) whose bonds it holds in its own euro portfolio. These scope 3 emissions are GHG emissions that banks generate indirectly through their lending and investment activities. 

Analysis focused on climate-related risks and resilience of the financial system

The report describes how the Bundesbank uses its own analytical framework to examine transition climate-related risks throughout the German financial system. Transition risks are financial risks arising from the transition to a net zero economy, such as rising carbon prices. The analyses conducted so far show that the German financial system is resilient to transition risks overall, but some financial institutions may be more affected, the authors of the report explain. According to long-run analyses, physical climate-related risks are viewed as tending to be moderate for Germany, but they could increase in the future. The Bundesbank is therefore working to gain an even clearer picture of these risks. Physical risks include, for example, droughts and floods resulting from climate change.

Sustainable investment strategies for the non-monetary policy financial assets

Non-monetary policy financial assets include the euro portfolio and foreign reserve assets. Here, the Bundesbank pursues sustainable investment policies for covered bonds as well as bonds issued by promotional and development banks and sub-sovereigns. Covered bonds are bonds issued by commercial banks and mainly backed by real estate mortgages. The investment concepts involve exclusions and weightings of portfolio shares based on climate-focused sustainability scores. These strategies take climate-related risks into account and promote the transformation to a net zero economy within the scope of the Bundesbank’s statutory mandate, the authors write.

Euro portfolio: Bundesbank discloses financed emissions for the first time

The euro portfolio mostly consists of covered bonds. Almost all the GHG emissions in the portfolio in the reporting year 2025 were attributable to emissions financed by banks. They are included in scope 3 emissions and usually account for the majority of banks’ GHG emissions. This is the first year that the Bundesbank has reported on this metric for its euro portfolio. The reason for this is the improved data situation – European commercial banks have expanded their scope 3 emissions reporting under the new European Sustainability Reporting Standards (ESRS). 

The report states that commercial banks’ GHG emissions from physical operations (scope 1 & 2) via the euro portfolio have shown a long-term decline since 2021. Only between 2023 and 2024 did the authors identify a slight increase. They mainly put this down to the fact that some banks chose a new approach to recording emissions from physical operations under the new ESRS requirements. Most of them therefore reported higher emissions from 2024 than in previous years. 

Foreign reserve assets: climate performance of sovereign investments improved

By the end of 2025, the greenhouse gas intensity of investments in sovereigns was in steady decline, the experts write. However, they point out that if the decline in greenhouse gas intensity observed since 2015 is adjusted for inflation, the drop is only just under half as large. These metrics are expressed in relation to gross domestic product adjusted for purchasing power parity. 

For the first time, the report analyses not only climate metrics but also the nature-related aspects of sovereigns. This shows that there are “still considerable gaps internationally with the UN Biodiversity Framework objective of conserving 30 % of the world’s land and ocean area.

Continuous expansion of sustainable investment strategies and analyses 

The Bundesbank remains committed to its responsibilities in the area of climate and nature-related risks and will continuously develop its analyses and sustainable investment strategies. Through its annual climate-related disclosures, the Bundesbank creates transparency about its progress.