Frank Elderson: The embrace of the horizon - forcefully moving with the changing tide for climate action in financial sector policies

Speech by Mr Frank Elderson, Chair of the Central Banks and Supervisors Network for Greening the Financial System, Member of the Executive Board and Vice-Chair of the Supervisory Board of the European Central Bank, at the Green Swan 2021 Global Virtual Conference, 3 June 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Many thanks to the organisers for inviting me to address this conference with so many distinguished speakers. I am truly honoured to have the opportunity to speak at this important event and to discuss the immediate action the financial sector can and should take in the light of the ongoing climate crisis.

Allow me to start with one disclaimer. As an Executive Board member of the European Central Bank, I am also a member of its Governing Council. Today is the first day of what we call the "quiet period" leading up to next week's monetary policy meeting of the ECB. Against this backdrop, I want to emphasise that nothing I say today has any bearing on the deliberations of the Governing Council.

Instead, in the true spirit of this conference, I would like to talk about swans. Let me tell you a brief story about the Bewick's swan. This swan has its breeding grounds in the Russian tundra and spends its winters in north-west Europe. Until around fifty years ago, it would typically spend winter in Ireland, the United Kingdom and the Netherlands. However, research published last year by the Netherlands Institute of Ecology has shown that the Bewick's wintering area has since shifted eastwards by around 600–700 kilometres. This move coincided with a similar shift eastwards of the line across Europe marking where the temperature is around five degrees Celsius in winter. This is just one specific example of how climate change is having an impact on our ecosystem. One specific example of how climate change is affecting the incidence and distribution of swans. And one specific example that the change is real.

The green swan

Today, however, we are not talking about the Bewick's swan, but rather the "green swan", by which we mean potential, systemic financial crises that stem from climate-related risks.