The European Central Bank (ECB) has concluded its 2024-2025 climate and nature plan, reporting that climate and nature-related risks are now embedded more deeply in its day-to-day work across monetary policy, banking supervision, and the management of its own portfolios and operations. The ECB also set out the main areas where it will intensify work to strengthen analytical and operational readiness as economic and financial impacts from climate change and nature degradation grow. Across the monetary policy framework, climate and nature considerations have been further integrated into the operational framework including the Eurosystem collateral framework, and the carbon emissions of the Eurosystem’s corporate bond holdings have been reduced. The ECB has expanded data and risk assessment work through climate stress testing and scenario analysis including the Fit-for-55 exercise, and is leading the design of climate scenarios within the Network for Greening the Financial System, alongside updated statistical climate indicators and methodologies. In supervision, follow-up with banks has supported improved capability to assess climate and nature risks, including binding decisions where necessary; the ECB also reports a 39% reduction in emissions from its own operations in 2024 compared with 2019. On nature, the ECB’s updated monetary policy strategy statement explicitly acknowledges implications of nature degradation, and ECB research identifies water-related risks as the most material. Looking ahead, priorities include work on the transition to a green economy including assessing banks’ prudential transition plans and exploring further incorporation of climate considerations into the operational framework, analysis of the growing physical impacts of climate change including banks’ capabilities to manage physical risk, and further assessment of nature-related risks including water-related risks. These priorities sit alongside ongoing actions such as implementing a climate factor in the Eurosystem collateral framework, further developing scenario and stress test methodologies, strengthening banks’ prudent management of climate and nature risks, and refining relevant data, indicators and disclosures.
European Central Bank - Banking Supervision 2026-01-16
European Central Bank Banking Supervision concludes 2024-2025 climate and nature plan and outlines next priorities
The European Central Bank (ECB) has finalized its 2024-2025 climate and nature plan, embedding climate and nature-related risks into its monetary policy, banking supervision, and portfolio management. Key priorities include enhancing readiness for climate impacts, integrating climate considerations into the operational framework, and assessing banks' transition plans and capabilities to manage physical and nature-related risks.