). in november 2021 the ngfs published an important report on climate - related litigation [ 15 ] which seeks to raise awareness about the growing source of litigation risk for public and private actors not convincingly supporting the climate change transition. understanding the risks arising from climate - related litigation is clearly crucial for central banks and supervisory authorities, and the ngfs is continuing to monitor this field carefully. it plans to publish a further report next year with an update on the many developments since 2021. i hope i am leaving you with the right impression. the ecb is not an environmental activist, but rather a prudent realist. it is our job to point out risks, whether they are macroeconomic, macroprudential, microprudential or related to litigation, and to ensure that the financial sector takes them duly into account. before i finish, let ’ s turn back to the brave fight of vanuatu. you cannot blame vanuatu ’ s president for seeking to defend the rights of countries most exposed to the ongoing climate and environmental crisis. nor can we blame him for wanting to impose obligations on those most responsible for driving the crisis. vanuatu ’ s mission is a stark example what the fight against the climate crisis is about. it underpins the task we have on our side. europe has realistically no other choice than to deliver on the objectives of the paris agreement. if we waiver, the costs will only increase both in a moral and financial sense. speaking as a european citizen, i would like us to be ready for the challenge ahead. as european central banker, supervisor and scholar of the law i will be even more forceful : our mandate requires us to be ready. 1. “ the looming legal showdown on climate justice ”, financial times, 10 november 2022. 2. article 2 ( 1 ) ( a ) of the paris agreement. 3. regulation ( eu ) 2021 / 1119 of the european parliament and of the council of 30 june 2021 establishing the framework for achieving climate neutrality and amending regulations ( ec ) no 401 / 2009 and ( eu ) 2018 / 1999 ( “ european climate law ” ) ( oj l 243, 9. 7. 2021, p. 1 ). 4. recital 25 of the european climate law. 5. article 5 of the european climate law. 6. case c - 11 / 00, commission v ecb, eu : c : 2003 : 395. 7. article 284 ( 3 ) tfeu and article 15. 3 of

climate performance. there are two main reasons for this decision. first, the ecb considered this essential in order to effectively pursue its primary objective of maintaining price stability. given that carbon - intensive issuers are more vulnerable to physical and transition risks arising from climate change, large holdings of bonds from such companies pose higher financial risks to the eurosystem ’ s balance sheet, which has an impact on the implementation of its monetary policy. second, “ tilting ” the cspp also serves the ecb ’ s secondary objective of supporting the general economic policies in the union. “ tilting ” its corporate bond reinvestments towards “ greener ” companies enables the ecb to align these reinvestments with the objectives set out in the climate law, which form part of those economic policies. this action was assessed as also being conducive, and not prejudicial, to price stability. more generally, this measure ensures that the cspp complies fully with the ecb ’ s obligations under article 11 tfeu by integrating the objectives of the climate law into the definition and implementation of the ecb ’ s policies and activities. this is one of the first steps in the ecb ’ s climate action plan, but the ecb is also looking into other ways to take climate - neutrality objectives into account in its monetary policy – for example, through the collateral that we ask when providing liquidity to banks. for banking supervision, there are several dimensions that i will briefly discuss. again, we do not directly apply the climate law. the climate law does not directly relate to our tasks as a banking supervisor nor does it relate to prudential supervision. therefore the ecb does not impose an obligation on banks to take the necessary measures to contribute to the achievement of the objectives of the climate law. however, we cannot ignore it. not only because we need to integrate environmental obligations into our policies due to article 11 tfeu, but also since the law will have prudential implications. therefore, the climate law and its consequences feature in our supervisory assessments, interactions with the banks and measures we take. why is that? banks will be at the forefront of the energy and climate transition, whether they want to be or not. their clients will face increasing hazards from climate change and environmental degradation as well as increasing regulation. some clients will have to wind down their operations, others will be stuck with stranded assets. a mandatory energy label has been introduced for real estate [ 10