Banking

Comment: Everyone involved in banking needs to prepare for the green transition

The ECB is taking action to reduce the carbon footprint in its portfolio and push banks to better manage climate and environmental risks

‘Over the past few years, we have started to look much more closely at how climate change affects the banks under our supervision.’ Above, the headquarters of ECB in Frankfurt. Picture: Getty

Climate change matters for central banks. It is not only an existential threat to civilisation, it also entails severe risks for the economy. Floods, storms and wildfires have become more frequent. Extreme weather events damage infrastructure, destroy harvests and raise food prices.

To secure a liveable future, the European Union is committed to achieving climate neutrality by 2050. This will require enormous investment and innovation, and it has implications for inflation during the transition phase. ...