National Bank of Belgium analysis finds falling carbon intensity in Belgian insurers, pension funds and investment funds’ equity and bond portfolios

The National Bank of Belgium has published an analysis, based on European Central Bank climate-related statistics, showing that the carbon intensity of the equity and bond portfolios of Belgian insurance companies, pension funds and investment funds has fallen since the post-pandemic economic recovery. The decline reflects both lower absolute CO2 emissions and revenue growth at portfolio companies, with the NBB noting that economic factors such as inflation have also contributed. For insurance companies and pension funds, the main driver was a reduction in absolute CO2 emissions by portfolio companies in the services and energy sectors in Italy, France, Belgium and the Netherlands. Inflation linked in part to higher energy prices also raised revenues in the energy sector, further reducing the emissions-to-revenue ratio. Investment funds followed a different pattern, with the fall in portfolio carbon intensity mainly explained by revenue growth that was independent of price increases across multiple sectors, particularly among portfolio companies in the Anglosphere and France, while lower absolute emissions played a smaller role. Since 2021, changes in portfolio composition have had only a limited impact, indicating that the recent improvement is primarily company-driven rather than the result of a broad investment reallocation. The analysis draws on ECB indicators published since 2023, to which the NBB contributes, covering carbon emissions, physical risks and sustainable financing for companies in which euro area financial institutions invest.