Green shoots: the next generation of sustainable central banking researchers

In Madrid last month, a rare cross-generational summit on the future of sustainable finance gave emerging green finance researchers the opportunity to take the spotlight and present their ideas.

While industry veterans continue to hold heated debates on technical fixes and incremental policy, this generation of climate finance thinkers are looking beyond the traditional boundaries of central bank policy making.

The PhD and early-career researchers from the EBI’s Young Researchers Group gathered seemed unfazed by the global ESG backlash. Instead, they laid out a vision for the future: a financial system built for stability, grounded in sustainability and good governance.

Since 2017, the group has become a hotbed for next-gen climate thinking. These scholars aren’t content to bolt “green measures” onto old monetary policies – they’re interested in recasting the very purpose of financial systems for a world shaped by accelerating climate impacts.

Their work, spanning supply chain enforcement to complexity theory – a scientific discipline that studies non-linear dynamics – and the future of the European Central Bank’s (ECB) mandate, points to a future where central bankers won’t have to choose between economic resilience and a liveable planet. The key for them is in designing frameworks sophisticated enough to pursue both simultaneously.

We asked some of the field’s brightest up-and-comers to set out their answers to two defining questions: what comes next for central banking, monetary policy, sustainable finance and governance? And how will the next generation of researchers shape that trajectory?

Sara Todeschini, University of Trento

The field of sustainable central banking is moving beyond initial climate-risk integration toward a mandate to reshape financial governance itself. This transition means addressing systemic ethical and social externalities, not just market failures.

Institutions such as the ECB and the European Banking Authority (EBA) now have the tools – including the EBA’s ESG risk management guidelines – to drive substantive rather than merely procedural change.

My research, building on my experience at the Global Reporting Initiative, explores how to safeguard the ethical and strategic integrity of frameworks like the EU’s corporate sustainability reporting directive amid deregulatory pressures, both within and outside the EU, and amid insufficient stakeholder involvement in standard-setting.

More than ever, academics and practitioners agree that sustainability regulation must prioritise quality, clarity and strategic relevance. Complex challenges require well-designed rules that distinguish between necessary complexity and avoidable, designed complexity.

That’s why all professionals in this field should champion materiality and stakeholder participation as core tools – ensuring that standards reflect real societal impact and that simplification means clarity, not dilution.

Only by guaranteeing high-quality data, meaningful participation, and coherent standards can we move the financial system toward a genuinely sustainable and resilient future.

Luca Verzobio, University of Glasgow

Central banks are now confronting the escalating risks posed by climate change, environmental degradation, and ecological tipping points. In response, many are expanding their toolkits. Recent advances include more robust climate stress tests, scenario analysis and the adoption of prudential transition plans.

My research contributes to this evolution by framing sustainability risk not just as a subset of financial risk but as part of a broader social-ecological system whose dynamics feed back into macroeconomic and financial resilience.

I am developing a framework that integrates insights from sustainability science and complexity theory with prudential regulation, allowing central banks to assess risks over longer time horizons, across sectors and geographies, and to calibrate interventions accordingly. I regard prudential transition plans as a key regulatory innovation, but believe their effectiveness depends on capturing the complexity of socio-ecological interdependencies.

With a joint background in financial law, I study sustainable central banking through an interdisciplinary lens. Now a PhD candidate in law and finance at the University of Glasgow, I previously worked with ClientEarth on my dissertation project and joined a policy research clinic with the Environmental Law Foundation.

Looking ahead, I see three central roles for next-generation researchers and practitioners: refining metrics and models to make sustainability risk quantifiable and comparable; contributing to institutional design that embeds sustainability into the core mandates of central banks; and fostering collaborations across finance, law, and sustainability science.

Zsa Zsa Knodler, Radboud University

In the face of uncertainty, the future of central banking depends on the willingness to see beyond traditional horizons and the “measure to manage” approach.

My research, which examines how the ECB’s mandate legally anchors sustainability within monetary policy, also discusses these core tensions.

In this light, even as EU priorities shift toward competitiveness, the ECB’s secondary mandate – while conditional on existing general economic policies in the union – is legally vital: it opens the window for the ECB to safeguard longer-term stability.

The omnibus package, which simplifies reporting and risks the loss of climate-related data, underscores why the ECB should adopt a precautionary approach. If data becomes less available while climate risks intensify, waiting for perfect measurement is no longer prudence – it is paralysis.

Climate change does not decelerate because political priorities shift.

With precaution guiding decision-making, and with the recognition that climate disruption threatens price (and financial) stability more than current models capture, monetary policy can help secure the conditions for long-term resilience and stability.

Having worked at the ECB and now researching green monetary policy, I argue that the next generation of central bankers must act before certainty arrives, as inaction is itself a destabilising choice.

María de Arcos Tejerizo, Pérez-Llorca

I am a litigation and arbitration lawyer at Spanish legal firm Pérez‑Llorca, focusing on civil liability and disputes involving global supply chains. Building on this practical experience and an academic background in public international and human rights law, I see the future of sustainable finance and governance as strongly influenced by private enforcement.

A distinctive feature of this evolution is that much of the litigation is being driven by actors who have traditionally had less geopolitical power –NGOs, civil society groups and affected communities– are now using legal action to compel transparency and accountability from global firms.

Even when public regulation is limited or politically fragmented, these claims uncover information about sourcing practices, labour conditions and environmental impacts that would otherwise remain hidden. Once this information enters financial markets, it reshapes behaviour: lenders, insurers, and export‑credit agencies factor litigation and reputational risk into pricing and coverage decisions, translating ethical exposure into financial cost. Companies, in turn, adjust their behaviour: they revisit procurement contracts, strengthen audit mechanisms and push sustainability standards further along their supply chains.

My research examines this interaction between enforcement and market responses, and how it reshapes supply-chain governance. Over time, I expect supervisors and central banks to draw on these privately generated datasets, helping to align financial practices more closely with sustainable economic outcomes.

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