The carbon footprint of the Riksbank's foreign exchange reserves

From 2025, the Riksbank will expand the reporting of foreign exchange reserves to strengthen transparency and promote comparability. This enhanced reporting provides a more detailed picture of the carbon footprint and how it changes over time. The Riksbank takes sustainability into account in the management of the foreign assets in the foreign currency reserves, provided that this does not adversely affect the objectives for asset management or the principles of consideration for the Riksbank's tasks and low-risk management.

Sustainability-labelled bonds in the foreign exchange reserves

The Riksbank's foreign exchange reserves contain bonds with different sustainability classifications. These bonds are labelled according to the guidelines applied by the International Capital Market Association (ICMA) and include green, social, sustainable and sustainability-linked bonds. The Riksbank has no specific objective of owning a certain proportion of these bonds; instead the holdings mainly reflect the market’s supply. At the end of 2024, bonds with different sustainability classifications accounted for 1.9 per cent of the foreign exchange reserves.

How is the carbon footprint of the foreign exchange reserves measured?

The Riksbank uses four different metrics to measure the carbon impact of the holdings of bonds issued by governments and regions in the foreign exchange reserves:

• Portfolio-weighted carbon intensity - Shows the carbon intensity of the countries or regions included in the foreign exchange reserves, calculated in relation to their economic activity.
• Total carbon emissions - Shows the total emissions of the countries and regions.
• Carbon footprint - Relates the total emissions to the amount invested.
• Carbon intensity - Compares the emissions of the foreign exchange reserves with the total economic activity of the countries and regions.

The carbon footprint of the foreign exchange reserves

The table shows the emissions of the foreign exchange reserves according to the metrics described above. The outcome is affected by the Riksbank's holdings of government bonds in different currencies and how carbon-intensive the issuing countries are.

Emissions metrics for the Riksbank’s foreign exchange reserves on 31 December 2024

Tonnes of carbon dioxide equivalents per million US dollars

Note. In the calculations, emissions data from 2021 are used in the absence of more recent data. Production-related emissions are reported by the countries themselves, while data on consumption-related and government emissions are calculated by data providers Carbon4 Finance and ISS ESG respectively. All emission metrics are calculated on the basis of the nominal values of the bonds.

Sources: Carbon4 Finance, ISS ESG, UNFCCC, World Bank, Australian Bureau of Statistics, Statistics Canada and the Riksbank's own calculations.

The figure below shows the development of the portfolio-weighted average carbon intensity from 2021 to 2024. The development is mainly influenced by the composition of the foreign exchange reserves and changes in the carbon intensity of the countries and regions whose bonds the Riksbank owns.

Tonnes of carbon dioxide equivalents per million US dollars