THE ECB INTENSIFIES IT’S WORK ON THE CLIMATE
Focusing on the ecological transition, the ECB seeks to transform climate risks and those related to nature in assets to modify the negative pattern of the high time in emissions of countries and companies.
Giving him a new challenge; “That is part of the positive impact on the economy and simultaneously on the planet by reducing negative impacts.
THE EUROPEAN NEWS
The growing impact of the climate crisis in the economy and the financial system necessary new measures necessary.
The ECB reaffirms its commitment to the climate action actions and will review them periodically.
In 2024 and 2025, the works will focus on three areas:
¹. Implications of the ecological transition.
². The physical impact of climate change.
³. The risks related to nature for the economy and the financial system
THE ECB COMMITMENT
Has decided to expand its work on climate change, identifying the three areas that will guide their activities in 2024 and 2025.
It is logical to put their attention on the impact and risks of the transition to a green economy, especially the transition costs and the associated investment needs; The growing physical impact of climate change and the way in which adaptation measures to a warmer environment affect the economy.
DEEP ANALYSIS FOR FAST-SOLUTIONS
This leads to analyzing the risks derived from the loss and degradation of nature, but also the way they interact with the risks related to the climate and how they could affect the activities of the ECB through its impact on the economy and in the financial system.
Deep analysis for quick solutions in terms of loss and degradation of nature, the ECB will analyze the close relationship with climate change and related economic and financial implications.
It will also explore more purposes the role of ecosystems for the economy and the financial system.
CHRISTINE LAGARDE’S THOUGHT
“a warmer climate and the degradation of natural capital are imposing changes in our economy and our financial system. We must understand and adapt to this transformation to continue to fulfill our mandate.”
“Extending and intensifying our efforts, we can better understand the implications of these changes and to help strengthen stability and support the ecological transition of the economy and the financial system.”
AGREEMENT OF CONCRETE MEASURES
In terms of the transition to a green economy, the ECB will intensify its work on the effects of the financing of the transition, the needs of green investments, transition plans and the way in which the ecological transition affects various aspects of our economy such as work, productivity and growth.
The results obtained will also be incorporated into the MCRO frame model of the ECB.
In addition, the ECB will study, within the framework of its mandate, the convenience of introducing new changes in its monetary policy instruments and portfolios in view of this transition.
FOCUS ON THE CONSEQUENCES
As for the growing physical impact of climate change, the ECB will carry out a more detailed analysis of the impact of extreme weather mechanic phenomena in inflation and in the financial system, as well as the way in which this impact can be integrated into climatic scenarios and in macroeconomic projections.
It will also evaluate the possible effect of adaptation, or of lack of adaptation, of climate change in the economy and in the financial sector, including related investment needs and the discharge gap.
ECB’s OWN PROGRAM
In terms of its own operations, the ECB will put up its eighth environmental management program to support the achievement of its carbon emission reduction goals for 2030.
In collaboration with the Eurosystem whole, their work will include early ecological design principles for the future series of euro banknotes and will incorporate considerations about the environmental footprint in the design of a digital euro currently in the preparation phase.
The decision to intensify efforts in these areas follows the assessment made by the ECB of its climatic measures from the launch of its climate calendar 2022 and to an adjustment of its work plan in light of changing conditions and improvements in the availability of data and methodologies.
SOLUTIONS AT SIGHT
The work provided for these areas will complement the climatic measures that the ECB currently applies in the functions it plays, including monetary policy and bank supervision.
The ECB will improve the indicators, the monitoring of risks and the disclosure of information related to the climate, and will continue to contribute to the development of climate policies in European and international forums.
SYNTHESIS:
In the face of the future, the ECB maintains its commitment to periodically review these measures in order to ensure that they are appropriate for its purpose and contribute to the fulfillment of its mandate.
NOTE: The ECB must take into account the effects of climate change in the performance of its functions within the framework of its mandate.
In addition, without prejudice to its price stability objective, the ECB must support the general economic policies of the European Union, in order to contribute to a high level of protection and the improvement of the quality of the environment, which includes the objectives of European Climate Legislation.
In accordance with Article 11 of the Treaty on the Operation of the European Union, the ECB is also obliged to integrate the demands of the protection of the environment in the definition and in the realization of its policies and actions.
The ECB introduced climate considerations in its monetary policy framework after reviewing its strategy in 2021.
CONCLUSION:
The ECB seeks to transform the European economy with solutions that stimulate the market and sustainable assets that stimulate the conventional financial system, increasing its traditional volume with attractive dynamic portfolios composed by assets:
¹. Environmental.
². Renewable energetics.
³. Integral efficiency (which reduces emissions to traditional industries), holding their competitiveness and allowing to be part of the gains of the ecological transition, while equipping with their low emission commands.
AUTHOR:
DIEGO BALVERDE
ECONOMIST
EUROPEAN CENTRAL BANK
