##i, a. et al. ( 2023 ), “ the climate change challenge and fiscal instruments and policies in the eu ”, occasional paper series, no 315, ecb, frankfurt am main, april. 8. abraham, l., o ’ connell, m. and arruga oleaga, i. ( 2023 ), op. cit.. 9. dorucci, e. and freier, m. ( 2023 ), “ the opportunity europe should not waste ”, the ecb blog, 15 february. 10. ecb and eiopa ( 2023 ), “ policy options to reduce the climate insurance protection gap ”, discussion paper, april. 11. in the joint discussion paper, the ecb and eiopa put forward several policy options to improve climate catastrophe insurance on which the institutions will collect feedback and discuss in a workshop with regulators, policymakers, insurers and academics on 22 may 2023. 12. in march 2023 we decided to increase the tilt towards bonds with a better climate performance as we moved from full reinvestment of maturing corporate bonds towards partial reinvestment of maturing corporate bonds to maintain a decarbonisation path for our corporate asset holdings that is compatible with the paris agreement. copyright 2023, european central bank

percent of business fixed investment. another leading hypothesis is that businesses were more risk - averse than warranted by the underlying economic fundamentals, especially early in the expansion. one obvious source of caution was the degree of conviction about the strength and sustainability of the recovery. concerns about terrorism and other geopolitical uncertainties were likely at play as well. although many periods of recovery are accompanied by concerns of economic growth and political turmoil, surveys in 2002 and 2003 suggested that business leaders were experiencing a more prolonged sense of gloom, with measures of sentiment dropping to low levels for as long two years beyond the trough in the business cycle. since the spring of 2003, however, the economy has been expanding briskly and thus the durability of the recovery should be a less significant constraint on capital expenditures now. indeed, more recently, some surveys of business confidence and capital spending plans have reached or exceeded the levels of the late 1990s. nonetheless, concerns about global political uncertainties often reemerge in executive suites and board rooms as important factors for business spending plans. regulatory environment still, one corollary of the corporate - caution explanation may have persisted. many have argued that the conditions created by the corporate governance scandals - and the regulatory response to those events - have contributed to a more cautious attitude toward risk taking. more concretely, the scandals themselves, and the markets ’ reaction to them, are said to have caused firms to restrain capital spending. clearly, sarbanes - oxley compliance costs have been substantial, diverting funds and, probably even more importantly, some of the attention of chief executive officers ( ceos ) and boards of directors from capital spending and r & d plans. every meeting that board members and executives spend focused predominantly on compliance issues is, by definition, meeting time generally not being spent on big strategic questions. however, proving the connection between executives ’ " mind - share " and capital expenditure rates is difficult. moreover, firms are benefiting to some degree from reforms arising from sarbanes - oxley. thus, research on the net effects of sarbanes - oxley being undertaken by aei and other institutions should be exceptionally useful as the economic, political, and legal environment continues to evolve. based on the evidence available to date, i believe that the uncertainty resulting from the regulatory and legal environment has had meaningful economic implications for business investment and cash holdings. catalysts for change each of these factors - increased foreign operations, greater investor focus on liquidity, business caution due