The effects of our purchases of long-dated assets on market yields are principally due to the fact that we withdraw duration from private hands, and as the securities we hold in our portfolio draw closer to maturity and “lose duration” progressively, the overall amount of duration contained in our portfolio has a tendency to melt away.
I will focus on the latter, on financial institutions’ exposures to transition risks. Efforts have so far mostly concerned investments in certain industrial sectors. Typically, the most climate-sensitive sectors are selected on the basis of an aggregate environmental metric, such as a measure of carbon emissions for the sector.