The European Central Bank (ECB) has successfully embedded climate- and nature-related risks into its core operations, marking the completion of its 2024–2025 climate and nature plan. Over the past two years, the ECB refined how these risks inform policy decisions, supervise banks, and manage its own portfolios, strengthening both financial stability and the bank’s operational resilience.
Key achievements include:
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Monetary policy integration: Climate and nature considerations are now incorporated into the Eurosystem collateral framework and macroeconomic assessments, including carbon reduction in corporate bond holdings. Transition policies, such as the EU Emissions Trading System 2, are factored into projections.
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Data and risk assessment improvements: The ECB enhanced climate stress tests and scenario analyses, including contributions to the Network for Greening the Financial System. New methodologies and updated statistical indicators improve monitoring of sustainable finance, emissions reduction, and physical climate hazards.
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Banking sector resilience: Banks are better equipped to assess climate and nature risks, supported by ongoing ECB supervision and binding decisions where necessary.
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Operational and balance sheet management: ECB operations incorporated climate considerations, reducing emissions by 39% in 2024 compared to 2019.
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Nature-related risk work: Research highlights the economic impact of ecosystem degradation, especially water-related risks, and its implications for monetary policy.
The ECB will continue to focus on three priorities:
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Supporting the transition to a green economy, including evaluating banks’ transition plans and operational frameworks.
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Addressing physical climate impacts on the economy and financial system, enhancing macroeconomic analysis and risk monitoring.
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Evaluating nature-related risks, particularly those linked to water and ecosystem degradation.
By further developing analytical and operational capacity, the ECB aims to maintain its mandate in an environment increasingly shaped by climate and nature-related risks, while contributing to European and global policy discussions.
