In a keynote speech at the Green Swan 2026 Conference in Manila, European Central Bank (ECB) Executive Board Member and Supervisory Board Vice-Chair Frank Elderson argued that climate adaptation and mitigation support Europe’s competitiveness and energy security. He identified policy uncertainty and access to finance as major barriers to investment, calling for predictable policies and deeper capital markets to complement bank lending. Climate change and nature degradation increasingly affect productivity, growth, inflation and financial stability, bringing them within central banks’ and supervisors’ mandates. Elderson called for macroeconomic models and forecasting procedures that reflect these effects, citing ECB research suggesting that severe water scarcity could put up to 24% of euro area output at risk. Adaptation requires investment in infrastructure, water management and energy systems that can withstand extreme weather, while mitigation limits future damage and adaptation costs. Greater electrification and renewable generation can also reduce dependence on imported fossil fuels and exposure to energy price shocks. Policy uncertainty constrains investment through two channels: firms postpone projects requiring substantial upfront capital and long planning horizons, while banks tighten credit standards and become less willing to take risks. Elderson argued against reversing legislative commitments on which firms have based investment decisions. With additional green investment needs estimated by the European Commission at around EUR 477 billion annually until 2030, bank lending needs to be complemented by deeper capital markets that help innovative firms and technologies expand. International capital flows and common standards also support financing and limit competitive disadvantages for firms investing in the transition.
European Central Bank’s Frank Elderson calls for predictable policies and deeper capital markets to finance the green transition
European Central Bank Executive Board Member and Supervisory Board Vice-Chair Frank Elderson argued at the Green Swan 2026 Conference that climate adaptation and mitigation support competitiveness and energy security while addressing risks to growth, inflation and financial stability. He identified policy uncertainty and financing constraints as key investment barriers, calling for predictable legislative commitments and deeper capital markets to complement bank lending.