Frank Elderson of the ECB discusses how climate and nature risks impact economies, the importance of resilience, adaptation, mitigation, and the role of policy and investment in the green transition.
Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board, delivered a keynote speech at the Green Swan 2026 Conference.
He highlighted the ongoing impact of climate change and nature degradation on European economies, citing the summer of 2026 as the warmest on record with severe droughts, wildfires, water scarcity, and ecosystem disruption.
He emphasized that climate and nature risks are systemic and increasingly influence macroeconomic outcomes, affecting productivity, inflation, and financial stability. Central banks and supervisors must incorporate these risks into their models and forecasts.
Elderson distinguished between adaptation and mitigation, stressing the need for both. Adaptation involves resilience measures like water management and infrastructure upgrades, while mitigation addresses the root causes through reducing emissions and transitioning to renewable energy.
The transition to green energy is also a strategic competitiveness issue. Reducing dependence on fossil fuels enhances resilience and energy security, with renewable technologies becoming more cost-effective. A ‘smart transition’ that combines mitigation and adaptation can foster sustainable growth.
Barriers to progress include uncertainty and access to finance. Stable policies and predictable rules are essential for long-term investments. The scale of required investments in Europe alone is hundreds of billions of euros annually, necessitating international cooperation and robust capital markets.
In conclusion, Elderson called for proactive, comprehensive efforts to build resilience through investment, international collaboration, and policy stability. Such actions can turn climate and nature risks into opportunities for a more resilient and prosperous economy.
