Climate and Nature Plan
The European Central Bank (ECB) releases the Climate and Nature Plan 2024-2025, which aims to summarize previous climate actions and formulate new working areas in the next two years.
The ECB believes that the physical impacts of climate change and natural degradation are gradually emerging, and the European economy needs to transition to net zero as soon as possible. Therefore, it needs to consider the impacts of climate and nature in its work and contribute to protecting and improving the environment.
Related Post: ECB Releases Climate Disclosure Report for Financial Assets
ECB’s Climate and Nature Actions
In recent years, the ECB has made contributions to understanding and responding to climate risks, such as integrating climate factors into monetary policy in 2021 and formulating a climate agenda in 2022. The ECB plans to continue its actions in the following areas:
- Macroeconomic analysis and monetary policy: The ECB plans to improve analytical tools for assessing and predicting climate impacts, strengthen risk management of climate change on the economic system, and continue to integrate climate change into monetary policy.
- Banking supervision and financial stability: The ECB will continue to address climate and environment-related factors and update its regulatory framework to identify, assess and mitigate risks, further integrate climate risks into the prudential framework, and disclose more information.
- Climate-related data: The ECB will improve climate reporting indicators and establish international standards for climate information disclosure.
- Central Bank Sustainability: The ECB will reduce the carbon footprint of its operations and investment portfolios and regularly disclose its climate related work.
Key Areas of Climate and Nature Plan
In addition, the ECB will focus on three key areas in its climate and nature plan, namely:
- Lead the transition to a green economy: Transition to a green economy depends on sufficient public and private funding for green investment and transition policies such as carbon pricing. The ECB needs to understand the progress of the transition and provide the necessary investments for the transition to achieve its monetary policy objectives and control the economic and financial risks associated with the transition.
- Cope with the physical impacts of climate change: Extreme weather affects the macroeconomic and financial systems through multiple channels. The ECB needs to understand the substantial impact of climate change on economic variables and explore climate adaptation policies and investments.
- Advance work on nature: Nature loss and degradation poses economic and financial risks, and there are numerous links between nature and climate. The ECB needs to further understand the impact of nature-related risks on the economy to deepen its understanding of natural risks.
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