ECB lecture on climate change and nature degradation risks

Frank Elderson, Member of the Executive Board of the European Central Bank (ECB) and Vice-Chair of the Supervisory Board, delivered a lecture at the University of Oxford on 21 May 2026 titled “A central banker’s perspective on climate change and nature degradation”.

The presentation outlined the material risks posed by climate change and environmental degradation to the EU economy, financial stability, and banking supervision. It highlighted the increasing economic damages from extreme weather events, the influence of fossil fuel prices on inflation, and the importance of transitioning to renewable energy sources.

It emphasized that climate and nature risks are interconnected, with nature degradation amplifying climate change and vice versa. The ECB has integrated these risks into its supervision, including risk assessments, stress testing, and developing climate scenarios. The ECB also monitors litigation risks related to climate and environmental issues, which could impact the financial system through legal actions against states, companies, and financial institutions.

The ECB continues to develop good practices for risk management, with a multi-year program to build capacity in the banking sector. It also stresses the importance of global efforts to limit warming and protect biodiversity, noting that inaction is not an option. The ECB maintains that addressing these crises is primarily the responsibility of elected governments, but it will continue to incorporate climate and nature risks within its mandates of price and financial stability.

For more information, visit the original publication at ECB press release.