Analysis
European Central Bank backs green capitalism against the return of fossil fuels
Elderson’s statements can be seen as an effort to institutionally protect the interests of Europe’s “green” capitalism as it seeks to differentiate itself from a U.S. capitalism more closely tied to fossil fuels and the oligarchic interests that support them.
The European Central Bank (ECB) has said that the climate emergency could provoke an economic shock of historic proportions. According to the ECB, extreme weather events could cause a loss of up to 5% of the Euro area’s economic output over the next five years, an impact comparable to the 2008 financial crisis.
Frank Elderson, a member of the ECB's Executive Board and Vice-Chair of its Supervisory Board, reiterated on Wednesday the need to “stay the course” in managing climate and nature-related risks, stressing that “taking a step back is not an option.”
Elderson cited data showing that damages from natural disasters have risen from an annual average of $131 billion to $320 billion in 2024 alone, with insured losses growing by 5-7% each year. Projections point toward an average temperature increase of 3.1 degrees in Europe, heating up at twice the global average.
The ECB's position reflects the political support for climate action in Europe. Its approach stands in stark contrast to that of other global institutions, particularly the U.S. Federal Reserve. This difference is a symptom of the internal political polarization and powerful fossil fuel lobby in the United States, factors that are delaying the integration of climate risks into domestic financial and monetary policy.
Elderson stressed that banks must apply robust risk-management practices across all portfolios, from real estate to the physical and transition risks associated with strategic sectors like cement, steel and energy. This capital reorientation, which would apply to approximately €1.2 trillion per year, is aimed at channeling liquidity toward the “green” part of capital. For this reason, he warned, we must not “delay, dilute, or postpone our efforts.”
Elderson’s statements on Wednesday can be seen as an effort to institutionally protect the interests of Europe’s “green” capitalism as it seeks to differentiate itself from a U.S. capitalism more closely tied to fossil fuels and the oligarchic interests that support them. This could explain why European banks are so keen to claim progress in their management of climate risks. In recent months, key players in the global financial market, such as BlackRock, have moderated or even walked back their rhetorical commitments to “green finance” and “ESG” criteria to avoid political retaliation from the Trump administration.
There is an open conflict right now between those who support climate-forward rhetoric and those who opt for short-term stock market stability to avoid divestment from companies under pressure from the new hegemony of “fossil fascism.” This trend mirrors the political dynamics the EU Commission itself is facing, under pressure from the far right and from governments like Italy's, which are attacking the Green Deal project, ill-conceived and currently in crisis.
Originally published at https://ilmanifesto.it/la-bce-sostiene-il-capitalismo-green-contro-il-ritorno-ai-fossili on 2025-10-02