A senior European Central Bank policymaker has warned that the climate emergency and collapse of ecosystem services pose a growing threat to core financial stability, as the bank steps up its monitoring of related risks.
Key facts
- Frank Elderson, a member of the ECB's executive board, issued the warning.
- He said the climate emergency and breakdown of nature pose a dramatically growing risk to the global economy.
- The ECB is stepping up monitoring of financial risks linked to the destruction of 'ecosystem services'.
- Elderson said more work is needed to assess risk from the collapse of ecosystem services.
- The warning came as wildfires raged, according to the Guardian.
A senior policymaker at the European Central Bank has said the climate emergency and the breakdown of nature pose a dramatically growing risk to the global economy, according to the Guardian.
Frank Elderson, a member of the ECB’s executive board, said the eurozone’s lender of last resort was stepping up its monitoring of the financial risks linked to the destruction of what he called ‘ecosystem services’.
Ecosystem services, as described in the report, are nature-related processes or assets that support human activity. Elderson indicated that the collapse of these services carries financial implications that require closer scrutiny.
The Guardian reported that Elderson said more work was needed to assess the risk stemming from the potential collapse of ecosystem services, signalling that the central bank views the issue as an evolving concern for financial stability.
The comments were made as wildfires raged, the Guardian noted, underlining the immediate and visible nature of climate-related threats highlighted by the ECB official.
The remarks reflect a broader effort by the ECB to incorporate climate and nature-related risks into its assessment of threats to the wider economy and financial system.
Why it matters
When a central bank flags climate and nature loss as risks to financial stability, it signals that these issues are increasingly seen as economic threats rather than purely environmental ones. This can shape how banks, investors and regulators assess and manage exposure to climate-related shocks.
Frequently asked questions
Who issued the warning?
Frank Elderson, a member of the European Central Bank's executive board, according to the Guardian.
What are 'ecosystem services'?
According to the report, ecosystem services are nature-related processes or assets that support human activity.
What is the ECB doing about the risk?
The Guardian reported that the ECB is stepping up its monitoring of the financial risks linked to the destruction of ecosystem services.