ECB’s Elderson urges more investment to protect nature and economic resilience

European Central Bank executive board member Frank Elderson has urged governments, financial institutions and investors to scale up funding for nature, arguing that damage to ecosystems is an economic and financial risk as well as an environmental one.

In a speech at COP17’s Finance and Biodiversity Day in Yerevan on 26 October, Elderson said nature underpins production and financial stability, from water supplies and fertile soil to forests that help regulate floods and droughts. He called for investment to protect and restore those systems, alongside public finance.

Elderson cited ECB analysis that 72% of euro-area companies depend on at least one ecosystem service, while 75% of corporate lending goes to companies with such dependencies. He said disruption to ecosystems can raise costs, reduce productivity and damage supply chains.

Water risks featured prominently in the speech. Elderson said drought conditions in Europe had driven rivers including the Rhine, Loire, Po and Danube to exceptionally low levels, affecting power generation and supply chains. He cited research suggesting that a once-in-a-century drought could put up to 24% of euro-area economic output at risk. He also said nearly 12% of euro-area output faces risks from inadequate flood protection.

The address also set out the ECB’s role. Elderson said nature-related risks increasingly matter to the bank’s work because they can affect price and financial stability, as well as the safety of banks. He said the ECB expects banks to identify and manage material nature-related risks, while stressing that central banks remain policymakers’ “policy takers”, not environmental policymakers.

Elderson said the global Kunming-Montreal biodiversity framework, adopted four years ago, had set a direction but that progress remained limited. He called for more international cooperation and asked how public and private finance could be mobilised at the scale needed, including for projects that provide public benefits without direct revenue.

The speech is an appeal for investment and coordination, not an announcement of new funding commitments. Elderson argued that delaying action would increase the economic costs of ecosystem degradation and restoration.