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NGEU - related growth at risk of undershooting
- Macro economy
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The EU remains the single largest issuer in the euro SSA market, having placed more than EUR 160bn in bonds in 2025 and expected to raise another EUR 90bn in the first half of 2026 alone. The core of this issuance has been under the NextGeneration EU (NGEU) programme, with its main instrument being the Recovery and Resilience Facility (RRF). The NGEU was launched in 2021 to provide support following the Covid-19 pandemic, and is now approaching its final year. In fact, all disbursements under the RRF must occur before the year-end, with payment requests by Member States having to be submitted before 31st of August 2026. On the back of this, this note examines RRF fund spending patterns and its effect on GDP by addressing five main questions: 1. How do RRF disbursements stack up against total envelopes? 2. Are Member States expected to receive the remaining funds before the 2026 deadline? 3. Are Member States on track for spending the already received RRF funds? 4. How have EU Member States spent the RRF funds? 5. What will be the impact on growth if EU countries do not fulfil all of their investment plans?
ESG Economist - Scenarios shaping EU ETS prices
- Sustainability
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Using Bloomberg's EUCPM model, we run scenarios to simulate several market and policy changes in the EU ETS market. Our baseline scenario sees EUA prices rising to €145/tCO2 by 2030 and €200/tCO2 by 2035, driven mainly by lower supply of allowances and a decline in the Total Number of Allowances in Circulation (TNAC).
What to look for at COP29: the cost of delay and the Trump victory
- Sustainability
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Over the past year, very little progress was made in the ambition and implementation of policies to reduce greenhouse gas emissions globally. At the beginning of next year, countries have to submit their new national commitments to reduce emissions according to the global targets set out in the Paris Agreement (NDCs), with the end-point of the targets extended to 2035, from 2030 . To keep the Paris goals within reach all countries, in particular the G20, have to overperform on their current 2030 climate targets. The new quantifiable goal for climate finance will need to be vastly more ambitious as well as more concrete. The Trump victory in the US could have significant consequences for global climate policy, which could already have an impact on progress at COP29.
ESG Economist - Where are carbon prices heading this winter?
- Sustainability
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The EU-ETS is the flagship climate policy driving the transition of high emission sectors in the EU. There are several drivers affecting the European Union Allowance (EUA ) price both in the short and long term. We use our in-house data driven model to sketch the outlook for EUA prices for this winter under a baseline, upside and downside carbon price scenarios. The scenarios differ in the short term dynamics of supply, demand, weather conditions, and geopolitical uncertainty affecting energy prices and economic activity. We expect EUA prices is to range between 64 and 73 €/tCO2 under the baseline scenario and have a range of 72-80 €/tCO2, and 45-61 €/tCO2, under the upside and downside carbon price scenarios, respectively.
ESG Strategist - Assessing the impact of joining the NZBA on banks’ bond spreads
- Sustainability
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In April 2021, the United Nations Environment Programme Finance Initiative (UNEP FI) formed the Net-Zero Banking Alliance (NZBA), an initiative that brings together banks across the globe committed to align their lending, investment, and capital markets activities with net-zero greenhouse gas emissions by 2050. By signing the NZBA, banks are committing, amongst other things, to (1) transition the operational and attributable GHG emissions from their lending and investment portfolios to align with pathways to net-zero by 2050 or sooner, and, (2) within 18 months of joining, set targets for 2030 or sooner, and a 2050 target, with intermediary targets to be set every 5 years from 2030 onwards. By committing to a net-zero pathway and subsequently setting decarbonization targets, a bank is not only signalling its commitment to sustainability to investors, but is also committed to decrease its exposure to climate risks. This can be done by either divesting from polluting companies or by assisting its high-emitting clients to reduce their own emissions. As such, signing to the NZBA might be supportive of the bank’s outlook, and, as consequence, of the banks’ bond spreads. In this note, we aim to understand whether signing to the NZBA (referred to as “the event” from now onwards) had an effect on signatory banks’ bond spreads. Using a fixed effects model, we calculate the direction and significance of signing to the NZBA on banks’ bond spreads. The note follows as: in the second section, we explain the sample and the methodology. In the third section, we present the results and interpret them, and elaborate on the limitations of our research. And, in the final section, we conclude.
Still a long road to go for EU banks to become greener and less exposed to transition risks
- Sustainability
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Using the Capital Requirements Regulation (CRR) Pillar 3 reports by banks in the EU, we assess their loan portfolios’ exposure to sectors that highly contribute to climate change, their “greenness” as well as their transition risk. We conclude that within the sample analyzed, 70% of the loan exposure of European banks is towards sectors that highly contribute to climate change, with particular concentration towards real estate (27%) and manufacturing (13%). In line with that, banks disclose that, on average, a mere 0.7% of the loan exposure is towards activities that substantially contribute to climate change mitigation. At the same time, there does not seem to be much difference between the average maturity of loans towards sectors that highly contribute to climate change and the average maturity of the loan book. Using the Alessi et Battiston (2023) methodology, we also calculate these banks’ Taxonomy-alignment coefficients (TAC) and Transition-exposure coefficients (TEC). Our analysis indicates that Nordic banks have a higher TAC when compared to the remaining of the sample, indicating a higher “greenness”, but also a higher TEC, contradictorily indicating a higher exposure to transition risks. The above highlights the importance of distinguishing between a bank’s existing “greenness” and their exposure to transition risks.
