christine lagarde : financing a green and digital recovery speech by ms christine lagarde, president of the european central bank, at the brussels economic forum 2021, frankfurt am main, 29 june 2021. * * * thank you for inviting me to speak to you today. the economist rudi dornbusch once said that “ in economics, things take longer to happen than you think they will, and then they happen faster than you thought they could. ” that describes the situation we face today very well. the pandemic has accelerated pre - existing trends at a pace we could never have imagined. there are possibilities for our economy in 2022 which seemed at least a decade away in 2019. companies have digitised their activities 20 to 25 times faster than they had previously thought possible. one in every five workdays are expected to move to the home after the pandemic ends, compared with just one in every 20 before. and the call for greener lifestyles has become thunderous. having accepted tough restrictions to fight the pandemic, 70 % of europeans are now in favour of stricter government measures to fight climate change. europe has long wanted to shift towards a more sustainable, more productive economy – and we now have the very real opportunity to do so. if we capitalise on this moment, the pandemic could accelerate labour productivity growth by around 1 % a year by 2024 – more than double the rate achieved after the great financial crisis. so how can we capitalise on this opportunity? during the pandemic, we have mainly been acting to preserve the economy, which was the necessary thing to do. compensation of employees fell by 3. 5 % in 2020 compared with 2019, but household real disposable income only declined by 0. 3 % – mainly because government transfers compensated for the loss of income. but as the pandemic passes, we need to shift the focus from preserving the economy to transforming it. this will require us to redirect spending by both public and private sectors towards the green and digital sectors of the future. specifically, we need to see investment of around €330 billion every year by 2030 to achieve europe ’ s climate and energy targets, and around €125 billion every year to carry out the digital transformation. the nextgenerationeu ( ngeu ) programme will help channel public investment towards transformative sectors. but it is currently less clear whether the private financial sector can do the same. fragmentation

. the city has been the centre of a series of landmark global green bond issuances, from china ’ s first green covered bond – the country ’ s first ever international issuance of a green bond – to the first green masala bond worth inr 20bn. in our view, such local currency green bonds will be particularly important to the climate transition in emerging market economies ( emes ). however, while they are important catalysts, green bonds will not be sufficient to finance the transition to a low carbon future. they accounted for only 3 % of global bond issuance in 2018. achieving the transition will require mobilising mainstream finance. advances in reporting and risk analysis are paving the way for investors to realise the opportunities in climate - friendly investment by re - orienting their focus to broader, more sustainable long - term value creation. such investment approaches are becoming increasingly common. there are now almost 2000 signatories, with over $ 80 trillion in assets under management, to the un principles for responsible investment ( un pri ), an international network of investors committed to considering esg factors in their work. 21 this swell of support is driven by the expectation that sustainable investment can generate excess returns in three ways. for more information on the commission ’ s sustainable plan, see : https : / / ec. europa. eu / info / business - economy - euro / banking - andfinance / sustainable - finance _ en see : cbi https : / / www. climatebonds. net / about and icma https : / / www. icmagroup. org / green - social - and - sustainability - bonds / greenbond - principles - gbp / climate bonds initiative. ( 2018 ). green bonds : the state of the market 2018. available : https : / / www. climatebonds. net / resources / reports / green - bonds - state - market - 2018 by indonesia, belgium, lithuania, ireland and seychelles see : https : / / www. unpri. org / pri all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx first, companies that score well on esg metrics could better anticipate future climate - related risks and opportunities. this makes them more strategically resilient and therefore able to anticipate, and adapt to, the risks and opportunities on the horizon, generating true alpha from esg. second, strong esg