Speaking at COP17 Finance and Biodiversity Day in Yerewan, ECB Executive Board Member Frank Elderson emphasized that protecting and restoring nature must be viewed as an investment in productive capacity rather than mere expenditure. He noted that the international community's progress on the Kunming-Montreal Global Biodiversity Framework has remained limited despite the clear necessity for action to ensure long-term economic prosperity.
ECB analysis highlights a significant economic dependency on ecosystem services within the euro area. Specifically, 72% of companies in the euro area depend on at least one ecosystem service, and 75% of euro area corporate lending is directed toward companies with high dependency on such services. This connection underscores how ecosystem deterioration can directly impact firm costs, productivity, and supply chain stability.
Climate-related physical risks pose quantifiable threats to the region's economic output. Research conducted by the ECB, the London School of Economics, and Oxford University indicates that a 1-in-100-year drought event could put up to 24% of euro area economic output at risk. Additionally, nearly 12% of economic output in the euro area faces risks stemming from insufficient flood protection.
Water security and pollution represent critical economic vulnerabilities. The European Commission estimates that if current levels of PFAS ('forever chemicals') pollution in Europe persist until 2050, the total cost to society could reach €440 billion. Furthermore, the cost of treating polluted water alone could exceed €1 trillion.
Elderson also addressed the accelerating pace of warming in Europe, noting that temperatures have been rising by approximately 0.56 degrees Celsius per decade since the mid-1990s, a rate more than double the global average. He highlighted the ocean's role as a buffer, noting it has absorbed roughly 90% of excess heat from global warming and approximately 30% of global carbon dioxide emissions, though these capacities are reaching their limits.
Regarding the financial sector's role, Elderson stressed that nature-related risks are global and systemic, requiring intense international cooperation. He pointed to the Network for Greening the Financial System (NGFS)—which includes 152 central banks and supervisors—as a vital platform for developing common methodologies for risk assessment and supervision to manage these emerging financial risks.