Introductory remarks by Isabel Schnabel, Member of the Executive Board of the ECB, at the Legal Conference organised by the European Central Bank on “The incorporation of environmental considerations in the supervision of prudential risks”

Frankfurt am Main, 5 September 2023

This year has been a record year in many respects. July was the world’s hottest ever month, seeing the hottest day ever recorded, while ocean temperatures hit all-time highs. We have experienced heatwaves, droughts, floods, gigantic hail and record low levels of sea ice formation in Antarctica. Climate scientists attribute these records to human-made climate change, exacerbated by the arrival of El Niño.

Not only do these events cause extensive damage to the environment and result in enormous human suffering, but they also adversely impact the macroeconomy, giving rise to significant financial risks.^[1]

Dealing with financial risks is the core task of prudential supervision.

Climate-related and environmental…