- Economy
- News Desk
- Source: European Central Bank https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp261026~d903d7ad85.en.html
Frank Elderson, a member of the European Central Bank's Executive Board and vice-chair of its Supervisory Board, said in a keynote address at the COP17 Finance and Biodiversity Day that protecting nature is an economic and financial necessity, citing ECB analysis that 72% of euro area companies depend on at least one ecosystem service and that 75% of euro area corporate lending goes to companies highly dependent on such services. He spoke at the conference's Finance and Biodiversity Day, which focuses on mobilising investment for nature.
Key facts
- Frank Elderson, ECB Executive Board member and vice-chair of the ECB's Supervisory Board, delivered the keynote at the COP17 Finance and Biodiversity Day.
- The World Bank estimates that as much as half of global GDP relies on biodiversity, natural capital and ecosystem services, Elderson said.
- ECB analysis shows that 72% of euro area companies depend on at least one ecosystem service, and 75% of euro area corporate lending goes to companies highly dependent on at least one ecosystem service.
- Research involving the ECB, the London School of Economics and Oxford University found that a 1-in-100-year drought could put up to 24% of euro area economic output at risk.
- Nearly 12% of euro area economic output faces risks from insufficient flood protection, according to the ECB.
Why does nature matter for the economy?
Elderson argued that natural capital is as fundamental to economic activity as roads, bridges and electricity grids. Water keeps factories and farms running, healthy soils sustain food systems, forests and wetlands regulate droughts and floods, and oceans absorb heat and carbon, he said. When ecosystems deteriorate, firms face higher costs, lower productivity and supply chain disruptions.
He said that for too long nature has been treated as free and inexhaustible, and that the depletion of natural capital has been mistaken for economic prosperity. "We have been consuming our capital and calling it income," he said. The consequences are already spreading from ecosystems to firms, from firms to balance sheets and from balance sheets into the financial system, he added.
What is water's role in economic resilience?
Water is the clearest example of the risks of failing to account for natural capital, Elderson said. He pointed to this summer's heat-exacerbated drought conditions throughout Europe, when major rivers such as the Rhine, Loire, Po and Danube reached exceptionally low levels, forcing the shutdown of critical nuclear power plants, negatively affecting hydropower and disrupting supply chains. Drought also contributed to the severity of wildfires.
"An economy cannot negotiate with an empty river, a depleted aquifer or a failed ecosystem," Elderson said. He noted that too much water can be equally problematic, with nearly 12% of euro area economic output facing risks from insufficient flood protection. He also highlighted polluted water, citing PFAS, known as "forever chemicals", which are found in everyday products from textiles and cookware to batteries and food packaging and can be extremely damaging for people's health and entire ecosystems.
What is the ECB's role?
Elderson's remarks are part of the ECB's broader effort to integrate nature-related risks into its supervisory and monetary policy work. He called for a shift from targets to implementation, from awareness to engagement and from ambition to investment, saying that COP17 must help accelerate the journey. Finance has a central role to play because without investment there can be no transition, he said.
Four years ago, the international community adopted the Kunming-Montreal Global Biodiversity Framework, which set out a pathway to living in harmony with nature by 2050. Elderson said that while the destination is set and the path is clear, progress has remained limited and nature has continued to deteriorate.
What happens next?
COP17 is scheduled to continue its deliberations, with the Finance and Biodiversity Day intended to spur concrete financial commitments. Elderson's speech signals that the ECB will continue to press for better measurement and management of nature-related risks in the financial sector, though he did not announce new policy measures in the address.
Source: European Central Bank
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