ECB advances climate and nature work after delivering on 2024-2025 plan
The European Central Bank has further embedded climate and nature-related risks into its core work, concluding its 2024-2025 plan. The institution remains committed to accounting for these growing risks and aims to improve analytical and operational readiness.
Embedding climate across the board
The European Central Bank has successfully integrated climate and nature-related risks into its core operations over the past two years, concluding its 2024-2025 plan.
This involved strengthening the monetary policy framework by incorporating climate considerations into collateral and reducing carbon emissions from corporate bond holdings.
The ECB also advanced data and risk assessment through climate stress testing and scenario analysis, leading the Network for Greening the Financial System's scenario design.
Banking sector resilience improved with continuous supervisory follow-up, ensuring banks better assess these risks.
Additionally, the ECB accounted for climate risks in its own balance sheet, reducing operational emissions by 39% in 2024.
Research on nature-related risks highlighted their deep interconnectedness with the euro area economy, particularly water-related challenges.
Three priorities for future resilience
The ECB remains committed to embedding climate and nature risks, intensifying work across three priority areas.
Future efforts will focus on the transition to a green economy, assessing banks' prudential transition plans and exploring climate incorporation into the operational framework.
Work will also address growing physical impacts of climate change by strengthening macroeconomic analysis and improving data and risk monitoring.
Finally, the impact of nature-related risks and ecosystem degradation, including water-related challenges, will be further assessed.
These priorities will enhance the ECB's analytical and operational capacity to manage an environment increasingly shaped by climate and nature risks.