How does climate change affect financial stability? Why isn’t the ECB buying more green bonds? How can banks better prepare for climate-related risks? Our host Michael Steen discusses these questions with expert guests Fatima Pires, Madelaine Roos and Patrick Amis.

The views expressed are those of the speakers and not necessarily those of the European Central Bank.

Published on 3 March 2020; recorded on 5, 6 and 13 February 2020.

In this episode:

(02:08) Climate change and financial stability

The risks emerging from climate change (physical and transition risks), their effects on financial stability, how stress tests help spot these risks and why international cooperation is key.

(13:22) Climate change and the green market

Why we don’t just buy more green bonds, how a taxonomy can help identify green assets and what the ECB is doing to make its own funds more sustainable.

(20:47) Climate change and banks

The role of banks in the shift to a more sustainable economy, how supervisors can help banks prepare for risks stemming from climate change and why transparency is important to better understand climate risks.

Climate change and the ECB

https://www.ecb.europa.eu/ecb/orga/climate/html/index.en.html

Speech (27 February 2020): C Lagarde, President of the ECB: Climate change and the financial sector

https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp200227_1~5eac0ce39a.en.html

Research Bulletin: Finance and decarbonisation: why equity markets do it better

https://www.ecb.europa.eu/pub/economic-research/resbull/2019/html/ecb.rb191127~79fa1d3b70.en.html

Working Paper: Finance and carbon emissions

\https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2318~44719344e8.en.pdf

Financial Stability Review: Climate change and financial stability

https://www.ecb.europa.eu/pub/financial-stability/fsr/special/html/ecb.fsrart201905_1~47cf778cc1.en.html

Working Paper: The Green Golden Rule: habit and anticipation of future consumption

https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2247~72dc51ddd8.en.pdf

Economic Bulletin: Purchases of green bonds under the Eurosystem’s asset purchase programme

https://www.ecb.europa.eu/pub/economic-bulletin/focus/2018/html/ecb.ebbox201807_01.en.html

Working Paper: The impact of disasters on inflation

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1982.en.pdf

Speech (2018): B Cœuré, Member of the Executive Board of the ECB: Monetary policy and climate change

https://www.ecb.europa.eu/press/key/date/2018/html/ecb.sp181108.en.html

ECB Press Conference Q&A (23 January 2020)

https://www.ecb.europa.eu/press/pressconf/2020/html/ecb.is200123~0bc778277b.en.html

European Central Bank website

https://www.ecb.europa.eu/home/html/index.en.html