Extreme weather events such as droughts, storms and floods will threaten price stability across Europe, according to a new report.
The report shows that climate-related disasters have significant impacts on the price of various goods, including food, beverages and other essential goods.
Environmental disasters can lead to immediate inflation, with price increases higher for food and beverages.
As the climate crisis continues, the frequency and intensity of these disasters will increase. The authors are therefore urging the European Central Bank (ECB) to introduce more climate performance criteria into their monetary tools.
The authors have criticised the ECB for failing to address the urgency and consequences of the climate crisis in its new monetary policy strategy.
One of the authors of the report, Dr Yannis Dafermos, senior lecturer in economics said: ‘Although a welcome step, the ECB’s climate action plan fails to provide an ambitious set of measures that are consistent with the climate emergency that we are facing.
‘The ECB roadmap focuses mostly on reducing the exposure of the financial system to climate risks, instead of prioritising the decarbonisation of the euro area financial system. The timeline of the action plan is also inconsistent with the urgency of the climate crisis. In our report, we identify a set of measures that would allow the ECB and the euro area national central banks to step up to one of the most important challenges of our times.’
Dr Mauricio Vargas, Greenpeace Germany financial expert, added: ‘This report proves there is no economic stability without ecological stability.
‘A vague ‘soon’ is not good enough: the ECB must start tackling the climate crisis immediately. Their new monetary policy strategy does recognise the overall impact of the climate emergency, but the bank has been too slow to adopt measures to deal with it. If it is serious about its climate commitments, the ECB must stop doing business as usual and immediately take preventive measures such as excluding fossil fuel companies from its portfolio.’
Photo by Martijn Baudoin