ECB’s Elderson: Consistent Regulation Necessary to Support Green Transition
14 November 2023
By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Executive Board member Frank Elderson on Tuesday called for regulatory and legislative adjustments related to the climate transition to treat private financial institutions the same way as other sectors of the economy.
At a conference organised by the European Parliament in Brussels, Elderson said that for ‘private finance to be able to effectively support the green transition of the real economy, it is crucial that regulatory and legislative changes are consistent across sectors.’
‘Financial undertakings should not be treated differently from other companies’, he said, adding that it was the ECB’s assessment that an equal treatment could ‘help to ensure that financial institutions – including banks – systematically integrate sustainability matters into their decision making and risk management practices.’
In addition to financing gaps, there were also shortcomings of the financial system that called into question its ability to withstand the damages associated with climate change, he said.
‘The lack of climate catastrophe insurance can affect the economy and financial stability’, he said. ‘If losses are not covered by insurance, households and firms will take more time to resume their activities, slowing economic activity. This would increase overall risks to the financial system.’