Prudential Policy, Climate Risk and the ECB Collateral Framework: Why It Matters for Business

This note, developed with CMS, explores how recent European Central Bank (ECB) developments in European prudential policy have the potential to strengthen the translation of macrolevel ecosystem and financial risk signals into decisions that change behaviour in the real economy.

Global regulators and financial institutions increasingly recognize ecosystem degradation and climate change as a source of systemic financial risk. Yet identification of financial risks alone is insufficient: while the financial impacts may be on the balance sheets of financial institutions or in the portfolios of asset managers, that is not where the underlying risks reside or where corporate activity intersects with the natural world.

To find more about WBCSD’s work around prudential policy, please contact cp-a@wbcsd.org.