ECB advances climate and nature risk integration after 2024-2025 plan

The European Central Bank (ECB) has further integrated climate and nature-related risks into its core work by completing its climate and nature plan 2024-2025. Over the past two years, the ECB has refined its assessment of these risks and how they inform policy decisions.

The ECB has improved supervision of banks and management of its portfolios and operations. This integration supports the ECB’s mandate and aims to safeguard the stability of the European banking system.

Climate and nature-related risks are now more deeply embedded across key areas:

• Strengthened integration in monetary policy: Climate considerations are incorporated into the policy framework, including the Eurosystem’s collateral framework, and emissions from the Eurosystem’s corporate bond holdings have been reduced. Climate factors are part of macroeconomic assessments and projections.
• Enhanced data and risk assessment: The ECB has contributed to climate stress testing, scenario analysis, and the development of climate scenarios within the Network for Greening the Financial System. Climate indicators have been updated with new methodologies and data.
• Banking sector resilience: Banks are better equipped to assess climate and nature risks, supported by ongoing supervision and binding decisions where necessary.
• ECB operations and balance sheet: Climate considerations are integrated into the ECB’s non-monetary portfolios. Emissions from ECB operations decreased by 39% in 2024 compared to 2019, aligning with its 2030 environmental targets.
• Advancing work on nature: The ECB’s monetary policy strategy now explicitly considers nature degradation, with research highlighting water-related risks as particularly material.

The ECB emphasizes that the economic and financial impacts of climate change and nature degradation are increasing. It remains committed to embedding these risks into its work to enhance resilience against physical and transition risks.

The ECB will focus on three priority areas: transitioning to a green economy, managing physical climate impacts, and addressing nature-related risks, including water-related issues. These efforts complement ongoing actions such as implementing climate factors in the Eurosystem collateral framework, developing scenario methodologies, and improving data and disclosures.

The ECB will continue to refine its analytical and operational capacities and contribute to European and global policy discussions. More information is available on the ECB’s website.

For media inquiries, contact Carlijn Straathof at +49 170 348 7585.