Frank Elderson: Natura finis magistra – acknowledging nature-related risks to make finance thrive

Keynote speech by Mr Frank Elderson, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the European Central Bank, at the Netherlands Bank/Official Monetary and Financial Institutions Forum conference on "Moving beyond climate: integrating biodiversity into financial markets", Amsterdam, 29 September 2022. 

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

Central bank speech  | 
30 September 2022

The translation of the full Latin name of Artis Zoo, founded back in 1838 as "Natura Artis Magistra", is "Nature is the teacher of the arts". Today, nature has something to say to all of us: it is hurting. And we are responsible for that hurt. Human activities are behind the decline in natural capital, the reduced capacity to provide ecosystem services and the loss of biodiversity. What's more, we are putting at risk more than half of global GDP. Around €40 trillion of global income relies on nature.

This means that nature-related risks, including those associated with biodiversity loss, could have significant macroeconomic implications. Failure to account for, mitigate and adapt to these implications is a source of risk for individual financial institutions and for financial stability. In a nutshell, this forms part of our mandate, as acknowledged by the NGFS in its statement on nature-related risks released in March 2022. The final report by the NGFS/INSPIRE joint Study Group referred to in this statement carefully explains how environmental degradation will expose financial institutions to physical and transition risks in a way that is very similar to climate change.