Green Central Banking

Photo by Arvind Vallabh on Unsplash The European Central Bank (ECB) is indirectly supporting biodiversity loss by supporting fossil fuel companies operating in critical nature areas, a report claims. The report by French thinktank Reclaim Finance shows that the ECB holds assets and accepts collateral from companies whose activities threaten biodiversity, while supervised eurozone banks provided US$161bn to these companies between 2021 and 2025.

The Nam Theun 2 hydropower project in Laos. Southeast Asia's reliance on hydro leaves its energy supply exposed to drought and El Niño-related fluctuations in water availability. Key points: A record El Niño threatens Southeast Asia’s clean energy transition by slashing hydropower output and driving reliance on coal and gas. Without rapid diversification into solar, wind and storage, temporary drought shortfalls risk triggering long-term investments in new fossil fuel infrastructure.

Key points A Banque de France research paper finds that nature-related litigation leads to significant financial losses for companies, with stock prices dropping about 1.3% after a filing and 1.7% after a settlement ruling. These lawsuits also create contagion effects across entire sectors, as investors treat them as systemic legal and reputational risks, with market reactions occurring at filing in Europe but at rulings and settlements in North America.

Photo by Georg Eiermann on Unsplash Key points The UK economy relies heavily on nature. Loss from nature could potentially disrupt up to £1.1tn across sectors like real estate, construction, agriculture and retail. Nature degradation increases flood, drought and wildfire risks that drive up business costs, insurance claims and consumer prices. Nature extends beyond the UK’s domestic borders.

© Kemal Jufri / Greenpeace There is a harsh paradox in today’s sustainability debate. The tools for understanding environmental risk are becoming more sophisticated: financed emissions, climate risk models, taxonomies, transition plans and carbon pricing are increasingly part of the language of business and finance. This is all important progress. But as the conversation becomes more technical, one question is still too often asked late: what happens to people inside the transition?

An LNG tanker. Thailand is trying to reduce its reliance on LNG. Boosting rooftop solar could help it make the switch. Image: Wikimedia Commons Key points Thailand’s rooftop solar growth is being held back by high costs, low buyback rates, restrictive quotas and policy uncertainty. Rooftop solar could help Thailand reduce its reliance on imported LNG as domestic gas production declines. Thailand aims to generate 60% of its electricity from clean energy by 2050, double its previous target.

Photo by Benjamin Jones via Unsplash. Key points Nature-positive investment must more than double if global climate and biodiversity targets are to be met. Climate scientist Tim Lenton’s new report argues that nature can experience positive tipping points  and offers a practical framework to help investors and regulators identify high-impact opportunities without getting lost in complexity, while urging better cross-sector collaboration and knowledge sharing.

Key points Hungary’s central bank (MNB) says its sovereign-bond holdings—the largest part of its foreign exchange reserves—face no immediate climate-related financial threat, owing to short asset maturities and issuers’ strong adaptation capacity. MNB stresses that climate risks and green investment still affect inflation and directly impact banks through lending and collateral channels.

Puraran Beach on Catanduanes Island in the Philippines. Plans are underway to lay submarine power cables to neighbouring island Luzon for stable electricity. Image: Flickr Key Points Extreme heat and El Niño conditions threaten Southeast Asia’s fossil fuel and nuclear plants far more than wind and solar generation, which remain virtually unaffected. Solar and wind energy systems recover significantly faster from natural disasters than coal plants, which can take up to a decade to rebuild.

Photo by Joan Li on Unsplash The African Development Bank warns a “super El Niño” could cost affected African nations up to US$20bn, while Tajikistan has launched Central Asia’s first sovereign sustainable-finance framework, and Australia begins to explore expanding its green taxonomy to include climate adaptation.