ECB president’s remarks on climate, nature, and monetary policy

Christine Lagarde, President of the European Central Bank (ECB), delivered opening remarks at the Climate, Nature and Monetary Policy Conference organized by the ECB, Frankfurt School, and CETEX.

She highlighted that this was the first such conference at the ECB and emphasized the evolution of climate and nature risk considerations in monetary policy over the past decade.

Lagarde noted that while scientific understanding of climate risk has long existed, its integration into central bank policy has been gradual, with initial focus on financial stability and later on monetary policy implications.

She discussed recent advances in knowledge, such as the impact of extreme weather events on inflation and output, and the development of networks like the Network for Greening the Financial System (NGFS), which now includes over 150 central banks and authorities.

Lagarde also described the ECB’s strategic efforts, including the 2021 climate strategy review and ongoing work on nature-related risks, such as a recent collaboration estimating that water scarcity could threaten up to 24% of euro area output.

She addressed the gap between scientific and policy progress, noting that despite record global emissions and climate challenges, political and societal responses have lagged, partly due to partisan debates and energy security concerns.

Lagarde emphasized the importance of impartial, fact-based analysis from the research and central banking communities to help policymakers and citizens understand risks and signals amid uncertainty.

She concluded by acknowledging the progress made and the ongoing need for research and preparation to address climate and nature risks effectively.