(Finance) – Prevent the destruction of nature and, therefore, possible damage to the economy “it is the responsibility of governmentssince they are the ones who develop environmental policies”, while the central banks and supervisory authorities”must take the risks into account tied to nature in the pursuit of their mandates, just as they do with any other factor vital to price stability and the safety and soundness of banks.” Frank Eldersonmember of the Executive Board and Vice-President of the Supervisory Board of the ECB, who reports that the ECB “is committed to doing exactly this” consistent with the limits of his mandate.
Speaking at the tenth edition of Green Finance Forumthe banker explained that “a thriving natural environment offers numerous benefits to support human well-being and the global economy”, but “the intensive use of land, the climate change, pollution, overexploitation and other human pressures they are doing harm our natural resources rapidly and severely.”
This – says Elderson – “represents a grave risk to humanity” and one “threat” to the economy and the financial system “since our economy cannot exist without nature”https://www.Finance.it/DettaglioNews/43_2024-11-19_TLB/.”One of the documents presented at the ECB Annual Forum on Central Banks in Sintra, Portugal, in July this year – he underlined – shows how the loss of biodiversity can cause production losses economy and at the same time decrease the resilience of such production to future biodiversity losses” although “so far, the contribution of the inputs that nature provides to the economy is rarely measured directly in statistics such as GDP”.
“Governments are stepping up efforts to protect the environment”Elderson recalled, adding, “at the ECB we looked at dependence on nature of more than 4.2 million individual businesses representing over 4.2 trillion euros in loans” and “assessed the dependence of companies and banks in the euro area on the various benefits that humanity obtains from nature”https: //www.Finance.it/DettaglioNews/43_2024-11-19_TLB/.”Our analysis shows that the companies in the euro area are significantly exposed to different ecosystem services, both directly and through their supply chains”https://www.Finance.it/DettaglioNews/43_2024-11-19_TLB/.”We also discovered that almost 75% of bank loans to businesses in the euro area are granted to companies that are highly dependent on at least one ecosystem service”.
“Politicians, regulators and supervisors are taking action. The Financial Stability Board recently took stock of supervisory and regulatory initiatives among its members and determined that a growing number of financial authorities are considering the potential implications that nature-related risks have for the financial sector. This work must continue. International fora must ensure that nature-related considerations are fully integrated into regulation and supervision, alongside continued efforts to take climate-related considerations into account,” he concluded.