ECB’s Sleijpen Says Central Banks Can’t Ignore Climate Change

The economic impact of climate change is undeniable and must be factored into monetary policy, according to European Central Bank Governing Council member Olaf Sleijpen.

“We see increasing shocks to the economy from extreme weather, high uncertainty, and large-scale structural changes to the economy as a consequence of climate change,” he said on Thursday. “Central bankers need to consider the impact on monetary policy transmission, equilibrium real interest rates, and added complexity in communication. All aspects that go to the core of central bank policies.”

Sleijpen was speaking in Frankfurt in his capacity as chair of the Network for Greening the Financial System, a club of global monetary authorities. He also heads the Dutch central bank.

Policymakers across the world have increasingly sought to account for climate change because of its potential implications for inflation, financial stability and bank balance sheets.

The approach has diverged in recent years however, with the ECB continuing to incorporate such risks into its operations and supervision, while the Federal Reserve scaled back its work in the area.

The US central bank left the NGFS in January 2025, saying it covered a range of issues that were outside its statutory mandate, and has also dismantled internal groups dedicated to studying climate-related financial risks.

Those moves coincided with the return to the White House of Donald Trump, whose administration has openly attacked green policies.

Without referring to any country in particular, Sleijpen dismissed such a stance.

“It is no longer possible to deny the economic impact of climate change,” he said. “We can see it, we can feel it, we can measure it. That has nothing to do with ideology, that is reality.”

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