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Supporting the green transition

Cutting carbon emissions is the only way to avoid the worst effects of climate change. For this reason, the European Union has committed to a 55% reduction in emissions by 2030 and a net-zero economy by 2050.

Although governments and legislators have the primary responsibility for driving and supporting this transition, we at the ECB must also do our part by promoting sustainable finance and greening our monetary policy operations, without prejudice to our primary objective of price stability.

Why does the green transition matter for the ECB?

The long-term benefits of a swift and orderly transition far outweigh its initial cost

The results of our economy-wide climate stress test showed that if we act early, the cost of transitioning to a carbon-neutral economy will be much lower than the cost of inaction.

An orderly transition to a green economy is an opportunity for us all, including firms and financial institutions, to benefit from clean and cheaper energy, technological innovations and new business.

Results of our economy-wide climate stress test

A green economy would contribute to price and financial stability in the long run

An orderly transition to a green economy would, in the long run, reduce climate-related risks for the entire economy and financial system, as well as for the inflation outlook and the assets on the Eurosystem balance sheet. As a result, it would contribute to long-term price and financial stability.

As an EU institution, we support this EU-wide effort

In line with the Treaty on the Functioning of the European Union, the ECB has the obligation, within our mandate and without prejudice to our primary objective of price stability, to support general economic policies in the EU. In this way, we contribute to the transition to a carbon-neutral economy and to protecting the environment.

How does the ECB support the green transition?

We share our expertise and advice to foster development on sustainable finance, as banks and other institutions in the financial sector play a crucial role in financing the green transition.

By working towards greening our activities, including our monetary policy operations, we also create incentives for a greener financial system.

Analysis and policy advice

We contribute to the development of climate-related policies in European and international fora on topics such as carbon pricing, scaling up green finance, green innovation and disaster risk management.

Monetary policy implementation

We account for climate change in our monetary policy implementation where appropriate, including in our asset purchases and collateral framework.

Press release

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