ECB board member warns climate and nature loss threatens financial stability

European Central Bank executive board member Frank Elderson says the accelerating loss of ecosystem services poses a growing risk to the eurozone’s financial system.

Frank Elderson, a member of the European Central Bank’s executive board, warned that the rapid erosion of ecosystem services is becoming a material threat to the stability of the eurozone’s financial sector. He pointed to the surge in wildfires across France and Spain as a clear illustration of climate-related hazards that can feed into credit risk and broader economic pressures. The ECB is intensifying its surveillance of nature-linked exposures and plans to publish an analysis later this year on how ecosystem degradation pathways could translate into loan losses for banks.

Elderson, who helped launch the Network for Greening the Financial System in 2017 alongside Mark Carney and François Villeroy de Galhau, said the issue is now seen as core to price and financial stability, not a peripheral environmental concern. He added that virtually no European bank would deny the relevance of climate and nature risks. The warning comes as the United States, under President Donald Trump, withdrew from the NGFS, leaving Europe to lead on green finance supervision.