Frank Elderson, member of the Executive Board of the European Central Bank (ECB) and Vice-Chair of the Supervisory Board, delivered a speech at the Green Swan 2026 conference highlighting the profound impact of climate change and nature degradation on the European economy.
The summer of 2026 was the hottest ever recorded in Western Europe, marked by severe droughts, devastating fires, water shortages, and increased pressure on ecosystems. These phenomena led to exceptionally low water levels in major European rivers, affecting transport, industry, and energy production. Vast areas were destroyed by fires, disrupting several key economic sectors.
This situation also had a heavy human toll, with tens of thousands of excess deaths linked to extreme heat during the summer. Elderson reminded that Europe is warming at a faster rate than any other continent, at more than twice the global average.
Beyond the visible impacts, these events underline that the economy deeply depends on nature. Water shortages affected not only households and agriculture but also manufacturing, transport, and energy. Ecosystem services provided by healthy forests, soils, rivers, wetlands, and oceans are essential to daily economic activity, often overlooked until they come under strain.
According to Elderson, these findings demonstrate that climate and nature are not external to the economy but integral parts of it, becoming a major macroeconomic concern. He raised several crucial questions: how to strengthen economic resilience against more frequent climate and natural shocks? How to reconcile ecological transition, competitiveness, energy security, and long-term prosperity? What barriers still hinder necessary investments?
Frank Elderson’s speech thus underscores the urgency of integrating climate and environmental risks into economic and financial analyses to better anticipate and manage their systemic consequences.
