frank elderson : making banks resilient to climate and environmental risks – good practices to overcome the remaining stumbling blocks speech by mr frank elderson, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at the 331 st european banking federation executive committee meeting, frankfurt am main, 14 march 2024. * * * introduction thank you for inviting me to this exchange on the current state of climate - related and environmental ( c & e ) risks. we have come a long way since 2019, when we first started discussing c & e risk management with you – the european banking associations and the european banks you represent. it is thanks to the hard work perfomed every day by thousands of dedicated climate risk experts in banks all over europe that notable expertise has been built up and vital progress achieved. and, thanks to the ongoing dialogue between supervisors and banks, the risks stemming from the climate and nature crises are increasingly being integrated into banks'risk management, strategies and governance. it is in precisely that spirit that i am here today : to listen to you, to discuss the challenges you face, but also to share the ever - growing set of good practices that we have observed. to suceed in our common goal of making banks resilient to climate and nature risks, it is vital that we maintain this dialogue and facilitate the exchange of good practices. climate risks are increasingly materialising before we get into the nitty gritty of c & e risk management, i will start by saying a few words on the risks themselves. the far - reaching impacts of climate change and nature degradation are more apparent than ever : 2023 was the hottest year ever recorded, while extreme weather events are becoming more frequent and increasingly these events also leave their mark on the economy. for instance, last year devastating floods in slovenia showed that just a couple of days of heavy rain can lead to damages, equivalent to 16 % of gdp1. climate risk events are not just one of the many standalone risks that banks face. they are instead a driver for each traditional type of risk reflected in the basel framework, from credit risk, liquidity risk and market risk to reputational and operational risk, including legal risk. for example, floods may impair a company's production facility, which then affects its ability to repay a loan, in turn leading to higher credit risk for the bank. 1 / 6 bis - central bankers'speeches consider what happens if your

##tik. this leads to stress in our societies. for each euro area country, the pressures for maintaining sound finances and remaining competitive have grown tremendously. at the same time, also the incentives of each euro area country to monitor its peers have grown to virtually the same extent. hence, my message is that each euro area country is a stakeholder in the success of the others. some final thoughts the global financial crisis has been a traumatic event in the still short history of the euro area. yet, it has also been a wake - up call. in my view it has been a catalytic event that is changing both europe and europeans. the contours of a shared european culture of stability are gradually emerging. it is a culture of respect of rules and institutions and transparency. this will support the economic growth that is indispensable to heal the legacy of the crisis. but let us be modest and bear in mind that solutions to the crisis are only good : if they are thought through carefully, if they are widely accepted and shared by european citizens, and if they are widely implemented across euro area countries and, when needed, improved and strengthened as necessary. as konrad adenauer put it many years ago, “ die einheit europas war ein traum weniger. sie wurde eine hoffnung fur viele. sie ist heute eine notwendigkeit fur alle ” ( the unification of europe was the dream of a few. it became a hope for many. today, it is indispensable for all ). bis central bankers ’ speeches