The ECB’s mandate in the face of climate change and biodiversity loss

This chapter delves into the mandate of the European Central Bank in relation to climate change and biodiversity loss. It reflects on the history of the interpretation of the ECB’s mandate and discusses the international developments on climate change on central banking and financial-sector supervision (NGFS, TCFD, BIS) and interprets the ECB’s primary mandate of maintaining price stability and its secondary mandate (to support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the EU which include climate change-related objectives). The chapter sees strong arguments to read the primary and secondary mandates as not only permitting but requiring the ECB to take full account of climate change and biodiversity loss, while additional arguments can be derived from the integration provisions of the TFEU and the binding nature of the Paris Agreement. The chapter refutes that the open market principle forms an obstacle to its reading and discusses the operational consequences of this interpretation, also in the field of prudential supervision of banks and against the background of the EU taxonomy.