ECB: Frank Elderson: From climate and nature risks to economic resilience and competitiveness

The summary above is from the announcement ECB published on October 19, 2026.

What the announcement says

Keynote speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, at the Green Swan 2026 Conference

We are living in a time of profound economic, geopolitical and technological uncertainty. Yet amid all this uncertainty, one thing is clear: climate change and nature degradation will continue to shape our economies and societies, and we will have to deal with the consequences. Climate change and nature degradation are a certainty in an uncertain world. The events of this summer have reminded us of that reality in the most tangible way possible.

For Europe, the summer of 2026 was not simply another warm season. It was the warmest summer ever recorded in Western Europe, marked by severe droughts, devastating wildfires, water scarcity and mounting pressure on ecosystems across the continent.[1] Water levels in major European rivers fell to exceptionally low levels, affecting transport, industry and energy production. At the same time, large areas of land were destroyed by fires and important economic sectors faced disruptions.[2] Europe is warming faster than any other continent at more than twice the global average.[3] The human toll has been severe, with tens of thousands of excess deaths linked to extreme heat recorded during the summer months.[4]

This summer also served as a reminder of how much our economies depend on nature. Water scarcity affected not only households and agriculture, but also manufacturing, transport and energy production. Across Europe, pressure on ecosystems highlighted the fact that healthy forests, soils, rivers, wetlands and oceans are not just environmental assets, but that they provide essential ecosystem services on which economic activity relies every day, and which often go unnoticed until they are put under strain.[5]

Taken together, this summer’s events conveyed a simple but powerful message: climate and nature are not external to our economies. They are embedded within them and, increasingly, they are becoming a macroeconomic concern.

This raises a number of important questions.

How can we strengthen economic resilience in a world of more frequent climate and nature-related shocks?

How do we ensure that, as we pursue the green transition, we also strengthen competitiveness, energy security and long-term prosperity?

And which barriers still stand in the way of the investment needed to make that happen?

Let me address each of these questions in turn.

Climate and nature crises pose a systemic risk

When a drought, flood or wildfire occurs, attention immediately and naturally focuses on the event itself. Taken in isolation, the economic and financial consequences may appear manageable. Yet individual events only tell part of the story. It is a bit like focusing on individual symptoms while ignoring the underlying disease. The more important question is how climate and nature-related shocks add up, interact, reinforce one another and affect economies over time.

In this context, I am reminded of an observation by the economist and author Simon Sharpe.[6] Scientists are trained not to overstate risks. Risk managers are trained not to underestimate them. This points to a trade-off that central bankers and supervisors know well. Faced with uncertainty, we can err in both directions: we can reassure ourselves too readily that a risk will not materialise, or we can raise a false alarm. Reducing the likelihood of one increases the likelihood of the other. Our task is therefore to reduce uncertainty as far as possible through better data and analysis, carefully assess the consequences of getting it wrong, and respond proportionately.[7] We cannot predict the future with certainty, but we can try to understand how risks may evolve, identify vulnerabilities and strengthen resilience.

This is the perspective central banks and supervisors should take when looking at climate and nature crises.

ECB

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Read the full announcement on ECB

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