From recognition to integration: the ECB’s progress on climate and nature-related risks and the role of its climate change centre

Prepared by Ivana Baranović, Giuseppe Barillà, Irene Heemskerk and John Hutchinson The relevance of climate change and nature degradation for central banks continues to grow amid worsening physical impacts and a slower than expected transition to a low-carbon economy.[1]Physical risks arising from more frequent and severe weather events, together with risks stemming from the transition towards a low-carbon economy, can affect inflation, economic activity, financial markets and the resilience of the overall financial system. Within its mandate, it is therefore important that the European Central Bank (ECB) develops a deep understanding of these risks and incorporates them into its monetary policy, banking supervision and other areas of activity. The ECB climate change centre (CCC) was established in 2021 to coordinate and provide strategic direction for the work of the ECB on climate-related issues.[2]The aim was to help the institution address the growing relevance of climate-related risks for the delivery of its mandate. The centre has evolved alongside the ECB’s climate agenda, supporting the progression “from recognition to integration”.[3]This transition has contributed to ensuring that the approach of the ECB to climate and nature-related risks is adequate and responsive. In this article, we review how the CCC has developed and what it has achieved in its first five years, highlighting the key institutional accomplishments and explaining how the ECB continues to respond flexibly to the changing economic, policy and environmental landscape. The 2021 ECB monetary policy strategy review recognised climate change as an important consideration for its monetary policy and central banking functions.Extensive analysis demonstrated how climate-related risks closely interact with price stability (Work stream on climate change, 2021). On that basis and within its mandate, the Governing Council committed to ensuring that the Eurosystem fully takes into account the implications of climate change and the transition to a low-carbon economy for monetary policy and central banking, in line with the climate goals and objectives of the EU.[4]This commitment meant adopting an ambitious climate action plan, which involved a wide range of ECB business areas and resulted in a more structured and coordinated approach to strategic planning and the assessment of climate-related risks.[5] The cross-cutting nature of climate-related risks called for a coordinated institution-wide approach, leading to the establishment of the CCC.The CCC reports directly to the President of the ECB. It is a small unit made up of staff members from different professional disciplines with relevant expertise, and it includes a climate scientist. In its first year, the CCC focused on designing governance structures, strengthening cross-functional cooperation and putting in place suitable coordination and reporting mechanisms to support the implementation of the ECB’s climate action plan. It also worked on building up analytical capabilities, creating internal networks and supporting ECB staff members with their climate-related work. As this climate-related work expanded and became more established, the CCC further developed the strategic climate objectives of the ECB and helped improve its readiness to respond to climate and nature-related risks.Building on the foundations established through the ECB’s 2021 climate action plan, the CCC coordinated and led the publication of the ECB’s climate and nature plan 2024-25, which expanded on the ECB’s previous work on climate change. It identified key priority areas and extended its research and analysis to nature-related risk for the first time. The CCC also continued to support the ECB in systematically integrating climate and nature-related risks into its analytical, operational and policy processes, by coordinating its work activities and building up internal expertise through training programmes, seminars, relevant publications and knowledge-sharing across ECB business areas and the Eurosystem. Establishing a central hub for this work has enabled the ECB to focus on sustained and coordinated engagement with external stakeholders on climate-related issues.Addressing climate change and nature degradation requires close cooperation among public authorities, the financial sector, academia and civil society. One of the key tasks of the CCC is therefore to ensure that external developments – such as changes in the macroeconomic and geopolitical environment, evolving climate and nature-related risks, technological innovation or different international initiatives – inform the work of the ECB while strengthening collaboration with partner institutions. This includes ongoing participation in international fora such as the Financial Stability Board, Basel Committee on Banking Supervision, G20 and G7, as well as cooperation with other European institutions, such as the European Commission, the European Banking Authority (EBA), the European Insurance Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority. The CCC also maintains regular dialogue with industry, academic and civil society representatives. The CCC supports the ECB’s participation in two central bank cooperation fora, namely the Network for Greening the Financial System (NGFS) and the Eurosystem Climate Change Forum.The NGFS was founded in Paris in 2017 by eight central banks and their supervisors. The aim was to advance the management of environmental and climate-related risks in the financial sector and to mobilise finance in support of the transition to a sustainable economy. Today, this forum comprises more than 170 institutional members and observers, becoming a global network and the main international forum for climate-related cooperation among central banks and supervisors from advanced, emerging and developing economies. In 2022 the Governing Council approved the establishment of a Eurosystem Climate Change Forum at the euro area level. This forum acts as a vehicle for fostering information exchange and knowledge-sharing between the national central banks, drawing on existing knowledge to ultimately advance its climate agenda. Membership in this forum was extended to include the other central banks of the European System of Central Banks (ESCB) in January 2026. Through its extensive engagement across ECB institutional functions and with external stakeholders, the CCC acts as a knowledge hub, helping to develop the ECB’s stance on climate and nature-related risks.The CCC facilitates a two-way exchange of knowledge by reporting external insights to ECB experts and sharing its in-house expertise through specific communication channels, such as workshops, seminars and conferences. This helps ensure that the policy work of the ECB takes into account diverse perspectives and a range of expertise. It also strengthens the analytical foundation for its policy and research activities and helps the CCC and other business areas to develop the ECB’s stance on strategic initiatives relevant to its work, including the European Commission’s sustainability Omnibus package and developments related to the EU Emissions Trading System. The CCC and its governance structure created the foundation for advancing the climate and nature agenda of the ECB over successive phases and for improving how business areas address climate and nature-related risks across the ECB’s core business functions.Thanks to the continuous cross-institutional efforts of multiple business areas and supported by its governance structure, the ECB has successfully drawn up and implemented several climate action plans, delivering on its commitments. The highlights of this work are presented below (Table 1). They give examples of progress made by relevant business areas to ensure that climate and nature-related risks are fully considered across the ECB. In parallel, a wealth of experience and knowledge are