The Banque de France (BdF) is committed to furthering its work on combating climate change next year, its governor said on Tuesday.
Integrating climate change into the central bank’s toolkit is not cosmetic or activist but “belong[s] to our core mandates of price stability and financial stability in a world where climate shocks increasingly shape macroeconomic conditions,” said BdF governor François Villeroy de Galhau.
Extreme weather events have increased drastically since 1980, costing economic losses of €822bn in Europe, according to the European Environment Agency. Over 25% of those losses have been concentrated in the last several years. The risks from climate-related losses have spilt into the economy, as only 43% of disaster losses are insured globally, according to SwissRe.
In a speech at the Green Finance Research Advances Conference in Paris, Villeroy de Galhau outlined the next steps the central bank will take.
Those commitments include aligning the central banks’ corporate bonds portfolio with a 1.5°C trajectory by the end of 2026, developing and implementing prudential transition plans for French banks at the start of the year, and, along with the European Central Bank (ECB), integrating a climate factor into the framework for private collateral.
In addition, Villeroy de Galhau reinforced the central bank’s maintenance of the secretariat of the Network for Greening the Financial System (NGFS), which is hosted by BdF. The group of central bankers plans to deliver a note on nature data in March, as well as updated guidance for supervisors and the next phase of its long-term scenarios later in the year, following the withdrawal of a key scientific paper which was used to inform estimates of the economic impacts.
BdF also plans to work with the ECB to accelerate the savings and investment union, “to better mobilise European savings in support of the energy transition”.
Villeroy de Galhau also noted that disclosures and reporting have helped the central bank have a better understanding of financial institutions’ exposure, with over 80% of euro area banks acknowledging material exposure to transition risks in 2024.
“The challenge ahead is simplification of reporting without sacrificing quality,” he said.
He noted that there’s an economic opportunity for Europe to transition to a green economy, although it will be costly in the short term.
“Denial does not eliminate risk, it amplifies it … The transition is essential to ensuring both environmental and macrofinancial stability, which are the foundations of economic growth”.
Clarisse Murphy, central banks campaigner at Reclaim Finance, said it was encouraging that a central bank governor make such a strong case in favor of green monetary policy but he fell short when discussing the investment needs of the green transition.
“The savings and investments union is ill-designed for this purpose as it doesn’t favor green investments at all. Instead of promoting the [savings and investment union], the governor should look inwards at the monetary policy tools available to support the green transition such as green dual interest”.
Villeroy de Galhau had previously said that measures like green quantitative easing were not legally or economically feasible.
This page was last updated August 31, 2026
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
