ECB’s Elderson: Risk of Failing on Price Stability Mandate If We Ignore Climate

9 October 2024

By Marta Vilar – MADRID (Econostream) – European Central Bank Executive Board member Frank Elderson said on Wednesday that ignoring climate risks would jeopardise the ECB’s ability to deliver on its price stability mandate.

Speaking at the IUCN Leaders Forum 2024, Elderson said, ‘Worldwide there is now a consensus among central banks and supervisors that climate- and nature-related risks are a driver of financial risks and therefore are squarely within the mandate of central banks’.

Not considering these risks would threaten the fulfilment of the price stability and bank resilience mandates, he said.

The ECB was doing plenty of work on climate, he said, observing that some three quarters of more than 4 million firms’ business models in the EU depended on nature-related services.

‘Since the EU is, to a large extent, a bank-based system, 75% - same number, unsurprisingly - of bank loans happen to be to firms that are highly dependent for their business model on one or more nature-related services’, he said.

This would be no issue if climate-related services were not under threat, but they are, according to Elderson.