Climate risks are also financial risks. On the one hand, extreme weather events such as droughts and floods or rising sea levels can have economic consequences. On the other hand, risks can arise from sustainable transformation, for example if CO₂ taxes rise significantly or people's consumption preferences change. This can influence important economic indicators such as growth and inflation or the stability of the financial system. In other words, climate risks also affect the core tasks of a central bank. The Bundesbank therefore analyzes and takes sustainability aspects, and climate aspects in particular, into account in its work. The mechanisms of action are shown in the chart. The effects of the loss of nature and biodiversity on the economy are also being increasingly studied. Further detailed information can be found in this report.
