The European Central Bank (ECB) has revealed plans to intensify its climate change initiatives in 2024 and 2025. The bank has pinpointed three key areas for focus: the impact and risks associated with transitioning to a green economy, the escalating physical impacts of climate change, and the economic and financial system risks presented by nature loss and degradation.
According to an ECB press release, the bank intends to focus on the effects of transition funding, green investment needs, transition plans, and how these changes will impact various aspects of the economy such as labor, productivity, and growth. In an effort to better comprehend the increasing physical impacts of climate change, the ECB plans to conduct further analysis on extreme weather events and their effects on inflation and the financial system. It also aims to explore potential implications of adapting to climate change on both the economy and financial system. Regarding nature loss and degradation - its third area of focus - the ECB will examine its connection with climate change along with related economic and financial implications.
"A hotter climate and the degradation of natural capital are forcing change in our economy and financial system. We must understand and keep up with this change to continue to fulfill our mandate," said Christine Lagarde, President of ECB. "By broadening and intensifying our efforts we can better understand the implications of these changes and, in doing so, help to underpin stability and support the green transition of the economy and the financial system."
As per another ECB press release, Lagarde affirmed that their decision to ramp up efforts in these areas aligns with their track record of climate change activities since establishing their 2022 climate agenda. However, she noted that they have adjusted their work plan due to evolving environmental conditions as well as improvements in data availability and methodologies. The ECB also highlighted that work associated with these three focal points will complement its ongoing climate change activities.