Fighting Climate Risks Central to ECB Delivering on Price, Financial Stability, Elderson Says

8 June 2023

By Xavier D’Arcy – FRANKFURT (Econostream) – European Central Bank Executive Board member Frank Elderson said on Thursday that climate, biodiversity and environmental issues were of key importance to price and financial stability, despite uncertainties regarding the exact impact of these developments on the economy.

In an interview with the Financial Times, Elderson said that a failure to deal with climate and environmental concerns would equate to a failure to deliver on the ECB’s mandate.

The ECB’s climate-related efforts were ‘not some kind of a flower power, tree-hugging exercise’, he said, but ‘core financial stability, core macroprudential, core price stability’.

‘It would be nice if we had more data, if we had more certainty, more clarity. But sometimes you have to deal with the knowledge that you have’, he said.

In his view, if the ECB ‘did not take climate, environment, biodiversity and nature-related aspects into account’, it would be ‘failing to deliver’ on its mandate.

Biodiversity loss was also a key concern for the ECB, which needed to ‘avoid doing too little, too late’, he said. ‘Destroy nature, and you destroy the economy’, he warned. The ECB needed to ‘dig deeper’, and was going to ‘look at physical risks and transition risks facing the economy that are related to biodiversity loss’, he said.

The ECB’s actions in this field were ‘not about saving the planet’, he said. ‘It’s about our mandate. It’s about safeguarding price stability. It’s about financial stability. It’s about a resilient banking system.’