Frank Elderson: Urgent and vitally important - 2023 as a key milestone in stepping up the management of climate and environmental risks

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 Foreign Bankers' Association (FBA) 30th anniversary, Amsterdam, 27 March 2023. 

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

Thank you for inviting me to the FBA's 30th anniversary event. As I speak to you today, the global financial system is going through turbulent weeks. In the confluence of multiple challenges, often the very urgent trumps the similarly vitally important. It is tempting and frankly quite human to focus the attention on the most immediately pressing challenges.

Climate-related and environmental (C&E) financial risks might thus not seem the most obvious topic for a keynote speech at this moment. However, exactly one week ago the Intergovernmental Panel on Climate Change (IPCC) published its Synthesis Report, according to which temperatures have already risen to 1.1 degrees Celsius above pre-industrial levels. This worrisome observation reminds us that addressing the increasing risks from the ongoing climate and environment crises is both highly urgent and vitally important.

This is the reason why in this keynote I want to stress that "we have no time to lose regarding the sustainable transformation"; that we need to "step up the global ambition to meet the Paris Agreement goals"; that our world needs "more ambition to accelerate the change towards a net-zero economy"; and that "financial institutions can and must play a key role in driving the world towards net-zero carbon emissions". I want to talk about the importance of "aligning credit portfolios with the objectives of the Paris Agreement" and "managing climate-related risks as a priority action".

These words don't beat around the bush. These words express clear ambitions. These words cut to the heart of the matter.

However, these words did not come from the ECB, the Basel Committee on Banking Supervision (BCBS) or the IPCC.

These are your words.