 So it's 2.30, so it's time to start. So I would like to welcome you very much to this afternoon's panel on the incorporation of environmental considerations in the supervision of prudential risks. So this year has been a record year, in many respects. July was the world's hottest ever month, seeing the hottest day ever recorded while ocean temperatures hit all-time highs. We have experienced heatwaves, droughts, floods, gigantic hail, and record low levels of sea ice formation in Antarctica. Climate scientists attribute these records to human-made climate change, exacerbated by the arrival of an innu. Not only do these events cause extensive damage to the environment and result in enormous human suffering, but they also adversely impact the macroeconomy, give them rise to significant financial risks. And dealing with financial risks is the core task of prudential supervision. Climate-related and environmental risks, in short, C and E risks, are now an important focal point for supervisors, including at the ECB. The topic of today's panel discussion, the legal aspects of the incorporation of environmental risks in prudential supervision, could therefore not be more apt or timely. And I would say I'm thrilled to be sharing an all-female panel on this important topic with three distinguished speakers, each of whom I will introduce just before they speak. In my own short introductory remarks, I would like to explain why C and E risks warrant special supervisory attention from an economic perspective. And there are three main reasons. First, their size, global dimension, and non-linearity, which imply large downside tail risks. Second, the irreversible nature of climate change and environmental degradation, and the corresponding time criticality for taking action. And third, the lack of knowledge and data on these risks. The sheer size of C and E risks justifies giving them special attention. Climate change constitutes an existential threat, implying large downside tail risks. According to the network of central banks and supervisors for greening the financial system, the NGFS, up to 13% of global GDP would be at risk by the end of the century, even before accounting for the potential consequences of severe weather events, sea level rise, and wider societal impacts from migration or conflict. Physical climate risks tend to be correlated globally as evidenced by today's simultaneous occurrence of extreme weather events, limiting the scope for diversification, and creating systemic risks for the financial sector. The economic consequences of physical climate risks could be mitigated by closing the large climate insurance protection gap. In the EU, only a quarter of losses caused by climate-related catastrophes are ensured, giving rise to additional risks to the macroeconomy, financial stability, and public finances. At the same time, financial sector risks are not confined to physical climate risk. The sector is also exposed to transition risks emanating from changes in policies around the globe in response to climate change. Lastly, the existence of tipping points may give rise to strong nonlinearities. Small changes can have much larger effects than observed historically, making predictions highly uncertain. A second distinct feature of CND risks is that if they materialize, the effects are often irreversible. Therefore, taking action is time critical to slow down global warming and the degradation of the environment. An orderly climate transition is more likely if decisive action is taken at an early stage. In an orderly transition, a sudden repricing of assets can be avoided, and financial intermediaries are able to gradually rebalance the investment portfolios and build up buffers that can absorb potential future losses. Moreover, in contrast to other risks, CND risks have an important feedback mechanism which accentuates time criticality. Not only does climate change affect the risks on financial intermediaries' balance sheets, but the financing of climate and environmentally unfriendly activities also amplifies CND risks creating externalities. A third important feature of CND risks is that the data available and the knowledge we have about them remain limited. We know that climate change and biodiversity laws are already unfolding rapidly, but we still lack knowledge about their precise timing and potential tipping points. This means we must work with scenarios with unknown probabilities of occurrence. Economic models of climate change are typically calibrated on historical data, which means they have difficulties in accounting for nonlinear dynamics that have never been observed. They therefore underestimate the economic fallout. The use of scenarios, as already done in macroeconomic climate stress tests, provides a useful way forward. But such scenarios may need to be enriched by socioeconomic factors such as the risk of violent conflict and mass migration. Even for the known risks, the data are limited. Private and official data providers are working intensively to close the data gaps. To make progress on this front, there's an urgent need for further disclosure initiatives based on the double materiality principle. In view of the existing data and knowledge gaps, it's very likely that climate-related and environmental risks are currently underpriced. Some risks may not be priced at all, as confirmed by recent research. Rating agencies have only just started to incorporate climate risk into their models. According to our bottom-up, stress tests on climate, most banks under European banking supervision insufficiently consider climate-related risks in their credit assessments. At the same time, various initiatives on the supervisory front show that banks are making progress in their management of C&E risks, although the trend is not uniform and laggards remain in all areas. Market mispricing of C&E risks can only be mitigated if more information on those risks become available, especially via comprehensive disclosures. In this respect, we still have a long way to go. So to conclude, climate-related and environmental risks warrant special attention owing to their size, global dimension, and non-linearity, the irreversible nature of the damage they can cause, the resulting time criticality of action, as well as knowledge and data gaps. And I'm now very curious to hear how the incorporation of environmental considerations in the supervision of potential risk is seen from a legal perspective. And so, as I said, I have three excellent speakers. And I would like to turn first my speaker to the left, which is Suzanne Kingston. So since January 2022, Suzanne has been a judge at the general court. Before that, she was a senior counsel practicing at the Irish Bar. Moreover, she looks back on a distinguished academic career teaching law at prestigious universities, such as the University College Dublin, Columbia University, and Cambridge University, among others. And she also received a prestigious ERC grant on how to make nature laws more effective. So we are very much looking forward to hearing your insights. Thank you so much, Isabel. And thank you very much for this lovely invitation to speak at this very impressive event. And a topic that is indeed very close to my heart. And I've been thinking about it in other contexts for many years. And so it marries very nicely with the work that I do now at the general court, a significant part of which involves banking law. So I'm delighted to have this chance to speak. There will be some overlap in what I say on what we heard yesterday. You will remember that there was a great deal of discussion about climate and the relevance of climate in Frank Alderson's keynote, obviously. And I won't be going back over what he said, but he summarised very nicely, as Isabel has touched on as well just now, the very significant work that the ECB has been doing in this area over the past few years. As Frank mentioned, the 2020 ECB Guide on Climate-Related and Environmental Risks, the thematic review in November of 2022. And indeed, as Isabel just mentioned, the work of the NGFS in this context also and the publication last week of the Microprudential Supervision of Climate-Related Litigation Risks document, which is a very impressive summary of what's been going on in this space. So I'm not going to go over that in any sense. I also start my remarks cognisant that in the legislative space, there has also been a lot of developments, but perhaps not as many developments as certain people would like. But starting from the, for instance, the 2019 amendment in the area of the European supervisory authorities duties, the 2019 amendment to the regulation, which obliges European supervisory authorities to take into account sustainable business models and the integration of environmental, social, and governance-related factors. And indeed to put in place a monitoring system to assess material, environmental, social, and governance-related risks taking into account the Paris Agreement. So I take all of those as a given, but I'm not going to spend a whole lot of time on them. What I want to focus on in the time I have available is really two areas. I want to go back to, let's say, the constitutional framework, which was touched on in the monetary policy context yesterday, but I want to go back to it again, perhaps in the context of Prudential Supervision today. With a view to exploring, perhaps discussing afterwards in the questions also, what are the constitutional possibilities of what we were talking about in this context? We've heard indeed very eloquently from Isabel of the kind of thinking that is going on behind what the ECB is doing, for instance, in this space, but I want to explore maybe what those constitutional possibilities might be and the framework's applicable. And then I want to end by looking a little bit at the role of the judge. It was something that Frank mentioned in his keynote yesterday. And I think to us as lawyers and indeed as judges, it is something that is, I think, of great interest. So starting then with the constitutional frameworks, so the constitutional rules of the game in what the possibilities are in this context. And there is a great debate as to whether the ECB and indeed supervisory authorities go too far, aren't going far enough, and what are the constitutional rules of the game in this context? And while conscious we've gone over some of this territory yesterday, we have to go back, of course, to the treaty to primary law and indeed back once again to Article 127 TFEU. And I do think it deserves a little bit of analysis in this context to really unpick and work through all the different levels of primary law obligations that I think are relevant in this context to understanding the duties of Prudential Supervisors and the ECB. So we start, of course, with, as we discussed yesterday, the first sentence of Article 127 TFEU and, of course, the primary objective of the European system of central banks being indeed, as we discussed yesterday, that of maintaining price stability. We also discussed the second sentence, the secondary mandate yesterday at some length in the context of monetary policies. But I'll go back to it and touch on it again. The idea that without prejudice to the objective of price stability, the ECB shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union, as laid down in Article 3 of the TFEU. So I just want to pause there, because we touched on some of these themes yesterday, but they're so important in this context that it's worth going back to them again. The first point to mention there is, as we discussed yesterday, those Article 3 obligations listed in the TFEU, of course, include, amongst many others, as we know, the objective of a high level of protection and improvement of the equality of the environment. So that is in there. Something that wasn't touched on, but that I think is as relevant in this context, in the particular context of climate, which Isabel was discussing, is the fact that Article 3 5 TFEU mandates that the Union, and I quote, shall contribute to the strict observance and the development of international law. And the reason why that is, of course, so important in this context, is that the Union is a signatory to the Paris Agreement, as we know, pursuant to Article 216 TFEU, international agreements concluded by the Union, including the Paris Agreement, are binding upon its institutions. And that includes, indeed, the ECB. We can't move on without acknowledging that very important caveat at the beginning of the second sentence of Article 127, paragraph 1. Without prejudice to the objective of price stability, and we mentioned this yesterday, it is an express hierarchy within the objectives laid down for the ECB, of course. It indicates that the duty to support climate change policies, which, indeed, I think is a duty in that context. We mentioned it yesterday, the idea that the ECB shall support the general economic policies in the Union, but that duty is limited to the extent that it may conflict with the objective of price stability. With the important caveat that, as we discussed yesterday, that, of course, we can't separate the two concepts. Price stability, indeed, the stability of the financial system, as Isabel has mentioned, and climate change can, of course, not be separated and are not two separate objectives, but rather the two are inevitably intermingled, as we know. So I think, as a matter of law, there are two levels of relevance of climate and environmental risks and objectives. There is the primary objective and the relevance as part of the goal of maintaining price stability, and there is, of course, the secondary mandate. Moving on, then, I do want to say a word about the concept of independence, which we discussed yesterday in the context of Article 30, TFEU, and there was a great debate and fascinating as to different types of independence and distinguishing between the primary and secondary mandate in that context. And I just want to go back to it very briefly, because, of course, as we all know in this room, that article provides that, essentially, the ECB shall not seek or take instructions from union institutions, bodies, offices, or agencies, or from any government of a member state, or from any other body. Now, there was some discussion yesterday which seemed to imply that that might preclude, in some way, the ECB having regard to everything that is going on in the climate space, in the legislative space. And I just wanted to note that that is not, in my own personal view, that's not my reading of what Article 1TO means. Of course, it doesn't allow direct instructions from any particular body or, indeed, member state, but it in no way, in my view, precludes the ECB from having regard to legislation that has been passed pursuant to the procedures provided for in union law, such as the European Climate Law, which I will come to in a moment, such as the great body of legislation that does exist now, for instance, the taxonomy regulation, which, again, I will mention in a minute. And having regard to that, as legislation passed in accordance with the procedures provided for by union law, which then form part of the system of union law, and indeed, the ECB is obliged to have regard to it as part of, as an institution governed, indeed, by the rule of law. So I just wanted to make that remark because I don't see necessarily a tension between the idea that the ECB, or indeed other supervisory authorities, should be cognizant of and take account of and draw legal conclusions from, or policy conclusions from, legislation that has been passed pursuant to the treaties and the guarantee of independence, which is, of course, a very, very important guarantee present in Article 130 TFEU. I simply think that we are talking about different things in that context. I want to move on to something that, again, was mentioned yesterday, but which is, I think, very important also in the prudential supervision context. And that is the integration principle, Article 11 TFEU. Also, we shouldn't forget present in virtually identical terms in the Charter of Fundamental Rights in Article 37. And it provides, as we know, that environmental protection requirements must be integrated into the definition and implementation of the union's policies and activities with the view to promoting sustainable development. So again, I just want to pause and let us reflect on the elements, the legal elements, the constitutional elements of that obligation. And the first is exactly what, as we've just mentioned, it is an obligation. It is not an option. It is an obligation. There is an obligation to integrate environmental protection requirements into the definition and implementation of all the union's policies and activities. There is no exception provided for in Article 11 TFEU, nor an exception provided to Article 37 of the Charter. Of course, there is a very large discussion to be had as to what exactly is meant by environmental protection requirements. That's the classic debate that has been going on for many years. Policymakers have said, well, if we are not active in making environmental policy, if we are not sitting in DG environment, going through the proposals for environmental legislation under Article 1-9-2 TFEU, then this is not our space. And it is not for us to decide what the environmental protection requirements that Article 11 is referring to, what those should be in any particular area. So in other words, it's not our job to decide on the definition of environmental protection requirements. And that is absolutely a fair point, particularly in the context of institutions such as the ECB, but indeed other institutions and other DGs that have been wrangling with these issues for many years also. And the obvious example there is DG competition. I'll touch on that in a minute, where they have also been wrangling with the question of how exactly they can come to terms with this obligation of integration while not being in any sense an environmental authority and indeed it not being within their expertise as it were. I would say that by and large, in my personal view, that whole debate as to the necessity for policymakers that aren't expert in an area to have to tread into and wade into the definition of environmental policy. To a large extent, that is an old debate because what we are talking about now is an environmental policy area and a legislative area that is to a very large extent now occupied by legislation that has been passed using the appropriate legislative procedures in many cases based on indeed the environmental legal basis in the treaty or joint illegal basis in some cases that define, harmonize and explain by means of binding rules what exactly we should understand by for instance environmental sustainable activities. I'm speaking for instance about the taxonomy regulation which I mentioned earlier, which is obviously a very, very important regulation in this context and which means I think that bodies like the ECB or indeed other bodies that are not familiar with and shouldn't be trying to make environmental policies in any sense, it's not their mandate but they can still have regard to what has been passed by means of the democratic process in those very important pieces of environmental legislation. So to summarise, the idea of environmental protection requirements in article 11 TFEU can I think to a large degree be defined by means of legislation that in the last 10 to 15 years has by and large been passed or we have a good starting point at least in understanding even if it's not our primary expertise in understanding how we go about looking at what is sustainable and what is not sustainable. And indeed in the context of for instance the taxonomy regulation we have legal cases coming before my court now that are trying to parse and get to the bottom of the interpretations of important provisions of that regulation. For instance we have a very important cases brought by Austria and client earth on whether or not for instance nuclear or fossil gas should be included as sustainable or non-sustainable activities in that context and that is as it should be. So we are trying to get to the bottom of the proper interpretation of the legislation that was passed pursuant to the legislative procedures of the EU treaty but that does not preclude other institutions from having regard to the regulation that has been passed as a starting point I think in meaning that they don't have to go and start to make policy as opposed to take policy as I think Frank was making that distinction yesterday. We also have and I won't spend much time on them conscious of the time but we have the very important corporate sustainability reporting directive in that context which is a huge step forward I think in terms of transparency and consistency coherence of reliable information in this context. We also have and I just want to say a quick word on the European climate law which I mentioned a moment ago that is an interesting one because there is a lot of debate as you will be aware of in legal circles as to what exactly it means for institutions such as let's say the European Central Bank or indeed other institutions because we have this binding legal objective and I would emphasise the word binding because it is expressly there in article one of the European climate law so the binding objective of achieving climate neutrality by 2050 in pursuit of the long-term goal of the Paris agreement and so we have that expressly there in the European climate law but then as to how it's operationalised article two of the European climate law states that the relevant union institutions and the member states shall take the necessary measures at union and national level to enable the collective achievement of the climate neutrality objective so there are very many talented lawyers within this room I don't need to tell you all that there's a lot of ambiguity in that sentence and it's true that if you look at the preamble to the European climate law trying to understand what might be a relevant institution in that context it seems to suggest that what is being referred to there is rather the European Parliament, the Council and the European Commission and perhaps not therefore by deduction other institutions such as the ECB be that as it may and I express no view on that it's a point that hasn't been decided yet by the union courts and I think you cannot get away from the fact that the binding objective is set out very clearly in article one of the of the climate law and it is a binding legal objective to which all union institutions including the ECB should have regard and and may have regard in pursuing and their mandates and so just briefly then and I'm conscious of the time and that the second aspect of article 11 that I want to touch on is the question of what is meant by integration and that is an absolutely crucial question even if we get past the problem of defining environmental policy requirements because we say that the space has by and large be defined by the union legislature in the correct way we still have to grapple with the question of what does integration mean and there has been a long legal debate as as you no doubt know as to whether or not there is simply a procedural duty on the part of institutions to show that they have had regard to have taken into account and the requirements of an of environmental protection in their actions or whether there's something more than that whether there could be a substantive obligation to actually grapple with the substantive integration of different policy areas my personal view is that while the procedural obligation is undoubtedly there and institutions must show and moreover must give reasons explaining how they have had regard to this integration obligation that there is an obligation to grapple with the substance and that does not mean that I think environmental protection requirements must trump other policy areas that I think can't be deduced from article 11 tfu or indeed article 37 of the Charter but I think one can reasonably suggest that conflicts between different policy areas can be resolved and should be resolved by resort to the principle of proportionality meaning that while the primary focus should be indeed the primary mandate of the institution in question in the subject area that we're talking about at the moment the stability of the financial system in the context of prudential supervision while while that can't be jettisoned as it were to the extent that is possible to have regard to and to integrate environmental protection requirements and with that mandate then that can and should be done I think pursuant to article 11 tfu so I've mentioned but I won't go into the detail of the secondary legislation that I think we're working with in this context but only to say that my reading of the secondary legislation that applies in this context aside from the 2019 ESA regulation which I've just mentioned but specifically with regard to the ECB single supervisory mechanism regulation and the duties placed on the ECB in that context is that they are open-texted duties to which indeed which lend themselves and which indeed makes it possible to have full regard to the requirements of article 11 tfu indeed again to emphasise this a personal reading of these provisions so for instance article 1 of the SSM regulation refers to the aim of contributing to the safety and soundness of credit institutions and the stability of the fund financial system within the union in each member state again setting that core obligation but still enabling and being open-texted enough with taking to take climate concerns into account in that context I would mention just before moving on just in support of that reading I think article 4-3 of the SSM regulation which I think confirms expressly that the ECB in carrying out its tasks and I quote shall apply all relevant union law and where this union law is composed of directives the national legislation transposing these directives so indeed effectively this specifies what we already know in the environmental context from article 11 tfu and all of this is going one would hope as a union lawyer towards a more coherent cohesive system of law that we're working with again under the rule of law and within the EU and before I finish I just want to touch on two other issues if I may and the first issue is the one I alluded to area earlier so it's what has been going on in the competition space I think I'm raising it because I think sometimes we speak in bubbles in EU law and we may not be necessarily fully obey with the discussions that are going on actually on very similar topics in parallel areas of EU law and some of the discussion that I see in the banking context reminds me very much of what has been going on in the competition context particularly the discussion of the importance of efficiency the possibility or not of integrating environmental considerations when there is an objective of complying with the principle under article 127 for instance of the tfu principle of an open market economy with free competition and just as in the banking context in the competition context there has been a great debate over whether or not this aim of not interfering with the market and looking for economic efficiency as the ultimate goal whether or not that enables environmental protection requirements to be taken into account and for those of you are interested in this topic I think you would find it fascinating to look at what DG Comp has published in the last few months in this space and the horizontal cooperation guidelines which are the result of a long period of reflection on its part I think on consultation where it essentially analyzes environmental protection requirements and climate issues as market failures you've mentioned earlier and reasons that although indeed economic efficiency remains the core goal of competition policy in the context of market failures such as environmental and climate issues that this doesn't preclude private actors such as in that context companies and undertakings from stepping in where policy makers have failed to achieve all of the objectives of union climate policy. Again DG Comp's approach is to link it to article 11 tfu and to compliance with the proportionality principle that I've mentioned earlier. The other interesting point in this context that I want to mention is the very important judgment of the grand chamber of the court of justice in the Hinckley Point case which you may have come across. Again I'm conscious it's not a banking case but actually I think it goes very much to the core of some of the issues that we're discussing today because in that case the court was amongst other things asked to look at whether environmental protection requirements can be taken into account in the decisions taken by the commission in the context of state aid and there's a fascinating part of the judgment where it looks at what the commission must do and again noting that environmental protection requirements are not mentioned in article 107 tfu the state aid provisions noting that the court nevertheless does in granting decisions on compatibility in that case again concerned a nuclear power station. The commission must examine whether or not there has been an infringement of relevant pieces of environmental legislation mentioning the EIA directive environmental impact assessment directive in that context while emphasising at the same time that the commission cannot simply prohibit environmentally harmful activities which are otherwise compliant with state aid law. So it's a very, very interesting balance and I would argue that it shows the court operationalising exactly this proportionality assessment in the context of conflicting objectives or potentially conflicting objectives between environmental and economic policy. Do I have one minute for the role of the judge Isabel? Thank you very much. What is our role in this context? There is a lot going on, much of it is legally uncertain simply because it is so fast moving and a lot of the legislation is as I say new. As I mentioned indeed my court has been receiving many of the initial cases looking at dealing with the details of for instance the taxonomy regulation. So there is a lot going on. I think there is a twofold relevance of the judge in this context. The first is the one Frank mentioned yesterday and it's of course all of the litigation that is going on in the area of climate and so the transition risk I think you would categorise it as and therefore the need to have regard to all of that climate litigation and the new ways that applicants are coming up with to try and effectively get to the same result but by very different legal means as we know and as Frank eloquently explained yesterday. The second though I think is a more classic judicial review role and it's what certainly my court does every day and that is interpreting and judicial reviewing the actions of the EU institutions and as we know the role of courts is relatively limited traditionally in this space in the area of banking we know the classic case law for instance in the supervisory context that says very clearly that what we are talking about is a limited review in the field of highly complex economic and technical assessments however I think it's an important however because the case law has been getting more stringent in recent years as you will have seen in this context however even in the case of complex assessments the court has ruled the EU judicature must not only establish whether the evidence relied on is factually accurate reliable and consistent but also it must ascertain whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of supporting the conclusions drawn from it. So those three additions to the limited judicial role are I think absolutely crucial and why I think it links back to the climate context is that I think what you see here is a very similar technique to some of the important climate cases that are coming out at the national level and which Frank mentioned yesterday in the context of climate risk. So for instance if you think about the French case the Affair du siècle if you think about the judgment of the Irish Supreme Court in Friends of the Irish Environment and indeed if you think about the ruling of the federal constitutional court in its very important 2021 climate ruling in all of those cases you see judges grappling with highly complex very voluminous scientific evidence being placed before it and where you might have thought judges may have had the tendency to say this is far too complicated and it is quite political so it's not our job but you don't see the judges coming to those conclusions in those very important cases rather than what you see is judges drawing conclusions from legal obligations to which states and indeed what institutions are bound by including legal obligations implementing the Paris Agreement that is exactly the technique that you see being used in many member states climate rulings and it is indeed very much in line with the principles of judicial review laid down by the general court of justice that I've just mentioned. So there's a great deal going on here I'm going to stop now but looking forward to the discussion. Thank you. Thank you so much Suzanne for these fascinating remarks. We are going to move to our second speaker who is Giuliana Bolzani. So Giuliana is a senior council at the International Monetary Fund working at the fiscal and financial unit of the legal department which provides legal advice to member states on the basis of legal design and implementation of legal reforms and before joining the IMF she worked for a long time as a lawyer at the central bank of Brazil. She's a specialist in central bank independence and the evolution of central banks legal mandates and she has also written about greening central banks balance sheets and we are very curious to hear your views. Good afternoon everyone it's a pleasure to be here to discuss such a relevant issue of the IMF. I'm Elizabeth for kind introduction and Chiara for inviting me to this great event. First the usual disclaimer that my opinions here are only mine and do not necessarily represent the views of the IMF or of the central bank of Brazil my former employer. Central banks and banking supervisory agencies are facing daunting challenges CNE risks for short to deal with these challenges I'll propose a path forward that does not purport to create something new but rather to reimagine and build upon what already exists. Addressing CNE risks does not require financial regulators and supervisors to receive a new and specific legal mandate related to the green transition. In fact ensuring that financial institutions properly assess and manage risks including CNE risks is mandatory for central banks and supervisory agencies whose legal mandates include promoting financial stability and the safe and soundness of banks. Because CNE risks can become material financial risks central banks and supervisory agencies must at the very least assess whether their models are able to capture CNE risks and to do so they need a comprehensive understanding of these risks and their related challenges. The IMF in the fulfillment of its missions has assisted member countries in these tasks. The funds legal department in particular has explored how these challenges affect central banks and supervisory authorities legal objectives. Two forthcoming working papers authored by colleagues from the legal department for instance analyze how climate change intersects one with banking supervisory law and two with central banks legal mandates. Here I'll argue that an open ended and binding regulation combined with iterative supervision can be a valuable strategy to assess and manage CNE risks in the financial sector without delay. The idea is to have flexible rules that create space for adaptive guidance coupled with supervisory tools that can offer ongoing monitoring to inform adjustments as reality changes. Importantly there is no one size fits all solution. The ideal balance between forms of regulation and levels of supervisory discretion will differ a lot across jurisdictions and should be tailored to local circumstances and needs, including constitutional and legal constraints. My starting point is a fundamental question for any policymaker dealing with CNE risks. What is the best regulatory approach to make sure that financial institutions take into consideration broader long-term risks in their risk assessment? At first glance, requirements and limitations should be imposed by detailed regulation and not by open ended regulation, which allows ample supervisory discretion. Without clear prescriptive rules, supervisors may amass too much power, some may say. Excessive discretion may in principle expose supervisors to more pressure from the government and the regulated industry, each trying to push its own agenda. On the other hand, prudential policy implemented by prescriptive rules might fail to promptly capture the time varying manifestations of systemic risks, especially when such risks are difficult to measure as it happens with CNE risks. In this case, more discretion combined with supervisory independence and accountability might deliver the best outcome. In the present situation of multiple global crisis, which lead to increased uncertainty over inflation, interest rates and other macroeconomic indicators, the argument for open-ended financial regulation can gain traction. The lingering climate and environmental emergencies seem to reinforce the argument in favor of open-ended financial regulation. CNE risks, as Isabel said, are uncertain, tend to materialize in a long-time horizon, and have their assessment supported by a buddy of data that is rapidly evolving in quality and granularity. Alluding to the uncertainty of CNE risks, the Bank for International Settlement, BIS, has described climate change as a green swan, because it's, and I quote, interacting nonlinear, fundamentally unpredictable environmental, social, economic and geopolitical dynamics. Therefore, an open-ended regulation of CNE risks is probably more capable of keeping up with constant changes and consequently of successfully protecting financial stability. Also, it's more feasible to reach an international consensus on open-ended regulation than it is on specific and granular rules. This favors the international consistency that is required to tackle climate environmental challenges. Given the global nature of CNE risks and of financial markets, financial regulation based on international practice and thus comparable across jurisdictions could be more effective than highly prescriptive rules that are different in each country and often lead to regulatory issues. Furthermore, an open-ended regulation is well suited to be combined with a collaborative and escalating supervisory approach. In contrast with a prescriptive set of narrowly formulated rules, whose violation leads automatically to enforcement actions and administrative sanctions. Under an open-ended regulation supervisors can follow a gradual and dialectic process that enables them to solve regulatory gaps in real time, including by bringing more sensitive issues of the chain of command. Combining open-ended regulation with an iterative approach to supervision also allows regulators and the regulated industry to learn together how to incorporate CNE risks into their risk frameworks, sharing information expertise as well as disseminating best practices along the way. The ECB here is a case in point. With the results of the 2022 thematic review on CNE risks of the banking sector, for example, the central bank published a compendium of good practices from a group of banks that had excelled in fulfilling supervisory expectations. Against this backdrop, supervisory guidance is a promising tool to bring about an iterative process of supervision of CNE risks in the form of supervisory expectations followed by related diagnosis and feedback from the supervisor. Guidance gives the regulated industry fair warning as to how central banks and banking supervisory agencies interpret the regulatory provisions and intend to exercise their discretionary powers. Clear communication detailing the supervisor's expectations is articulating the reasons behind these expectations is paramount to the effectiveness and legitimacy of the supervisor's discretionary actions. Along these lines, the NGFS recommends that supervisors set expectations to create transparency for financial institutions regarding the supervisor's understanding of a prudent approach to climate related and environmental risks. Guidance increases the predictability and conformity of supervision and makes supervisors' actions more transparent not only to the regulated industry but to the public. Setting supervisory expectations also gears institutions to better understand financial risks that can negatively impact themselves and their counterparties and helps them improve their internal risk management processes. Given that CNE risks materialize in a long-term horizon and data around them are still incomplete also as you said. Supervisory expectations should explain how and to what extent this risk category is being incorporated into financial supervision and what supervisors want to see from financial institutions. The flexible and non-binding nature of supervisory guidance favors iteration, negotiation, dialogue and a continuous exchange of information and expertise between supervisory authorities and financial institutions. It allows supervisors to be more agile when responding to the rapid evolution of science and data related to climate change and other environmental phenomena relevant to the financial system stability. Because it is non-binding supervisory guidance tends to be exempt from administrative law requirements that apply to traditional rulemaking. For example, it typically does not have to be preceded by a notice and comment period and by cost-benefit analysis. In any case, the non-binding nature of instruments like supervisory guidance or guidelines must be clear. The goal is to create a virtual circle that leads to compliance without requiring stringent enforcement actions and not to circumvent relevant administrative requirements and conditions. However, as supervisory guidance does not have the force and effect of law or regulation, it should not contain direct prescriptions, such as requiring the outright divestment of carbon-intensive sectors as noted by the NGFS. Nor should it serve as an autonomous basis for enforcement actions. Instead, its goal is to nudge the financial industry to proactively manage the risks. That said, well-articulated supervisory guidance can precede enforcement actions without being their sole foundation, I repeat, and give them increased legitimacy. To enhance its effectiveness, supervisory guidance should be complemented by diagnosis and feedback regarding the industry's adherence to the supervisory expectations in the form, for example, of DRCO letters, individualized feedback letters, progress reports, or thematic reviews. Diagnoses of how financial institutions are dealing with CNE risks is in part informed by scenario analysis and stress testing. Both these tools enable a forward-looking snapshot of the financial institutions and the exposure to CNE risks, which is particularly relevant to the present assessment of CNE risks, considering how little historical data and patterns exist. Scenario analysis and stress testing also contribute to a better understanding of the size and the characteristics of physical and transition risks stemming from climate change and environmental harm. Further enhancing the iterative nature of supervisory guidance. By providing regulators, supervisors, and the regulated industry with a comprehensive diagnosis, they support the development of more adequate and tailor-made policies, as well as the improvement of internal risk management structures and the adjustment of strategic business decisions and governance structures. With that in mind, let me conclude. The climate and environment crisis is real and we are already seeing and feeling its damaging effects. What then can central banks and banking supervisory agencies do in response? Directly interfering with capital allocation to fight this crisis is treacherous. Central banks and banking supervisory agencies do not have the tools to do it successfully and in many cases nor the legal mandate to do it legitimately. Inertia, on the other hand, would mean coming short of their responsibilities regarding financial stability and the safe and soundness of banks. To fulfill their legal duties to do their homework, as Frank Elderson said yesterday, central banks, regulators, and supervisors must reinvent themselves. Within their mandate, they must contribute to the all-hands-on-deck that is now needed. They must strive to build capacity and expertise to better understand the C&E risks that threaten the financial system. They must incorporate these risks into their regulatory and supervisory frameworks. And they must require that financial institutions take C&E risks seriously and react accordingly to the existing threats. Doing so entails revisiting legal and regulatory provisions and adapting supervisory policies and instruments to make them capable of coping with the radical uncertainty, complexity and long-term effects inherent in this category of risks. In this context, the concept of open-ended regulation can be considered a starting point to enhance the supervisory treatment of C&E risks. Open-ended regulation, however, does not mean light-touch regulation and toothless supervision. Supervision should be firm and timely, and it should include enforcement actions when rules are violated. In the aftermath of this year's bank turmoil, just to keep with the recent examples, regulators themselves acknowledge that hesitant supervision contributed to bank failures. It should be clear from the start that central banks and banking supervisory agencies will not be tolerant or lenient with uncooperative institutions and repeat offenders. Forceful supervisory guidance followed by diagnosis and feedback is much needed to clear the demonstrate whether progress is being made and if progress is not being made, the administrative record will serve to support enforcement actions against violators of binding provisions. Running away from the challenge is not an option. Central banks, regulators and supervisors must find inventive, even if not new, ways to incorporate environmental considerations in prudential regulation and supervision. I hope my contribution today helps taking some steps in that direction. Thank you. Thank you very much, Juliana. I'm actually curious to hear what the other panelists have to say about your thoughts on open-ended regulation. It's interesting. So we move to our final speaker who is Werle Kollat and Werle holds the chair of financial law at Kaoum-Leuven University and is a co-director of the Jan Ronse Institute for Company and Financial Law. Additionally, she's the chair of the Securities and Markets Stakeholders Group advising the European Securities and Markets Authority ESMA and she is a member of the Belgian Resolution Authority and one of her many research interests is sustainable finance. So it's great to have you here. The floor is yours. Thank you very much, Isabel, and thank you to the ECB Legal Service for the kind invitation. I'm very honoured to get the chance to share some of my views with you today. I would like to start with a gripping quote of Frank Eldersen. If we destroy nature, we destroy economic activity, and this will ultimately have a material impact on the banking system. I very much agree. I would like to put another quote from a recent article of mine next to it. High levels of stability, integrity and consumer protection are key to ensure a sustainable economy. Those quotes may at first sight seem antithesis, but obviously they're not. Sustainability and stability are dependent on each other. We need a sustainable economy to ensure bank stability, and we also need bank stability to ensure a sustainable economy. This brings me to a key question that I would like to address in this speech. How prudential regulation can or should contribute to a sustainable economy, and what should happen in case sustainability and traditional prudential policy objectives conflict? Let's first have a look at those traditional prudential policy objectives. Until recently, no legal scholar in financial regulation would have disputed that the following three objectives are the key objectives of financial regulation stability, micro and macro stability, market integrity, and user protection. But as you all know, there's a recent history where since the European Commission Sustainable Finance Action Plan, Sustainable Finance has dominated the EU legislator agenda on financial regulation, and so to implement the action plan, myriad new regulations and amendments to existing regulatory frameworks have seen the light of day weaving sustainable finance into each and every aspect of EU financial regulation. This raises the question whether sustainable finance should today be considered a new autonomous objective of financial regulation next to the three others, and to be sure with autonomous, I mean that we need the sustainable finance objective to fully explain why certain rules of financial regulation are there. If we don't need them to explain certain rules, it would at most be supporting objectives, giving some additional direction to the rules. Second question, I would like to raise and that it's clear that it is up the objective, let's see whether it's autonomous or not, but how should it stand in relation to the other existing objectives? Which one should get priority in case of conflict and I'll give you an example of where such conflict may arise. But let's first have a look at this means the sustainable finance objective because it actually has different meanings. Just have a look at the action plan which formulates the sustainability objective as a cluster objective, including first reorienting capital flows towards sustainable investments. That sounds like an autonomous objective does not seem to have much to do with stability or user protection. Secondly, managing financial risks stemming from environmental factors. I think this is very close to the stability objective. If we're talking about managing risk, that is actually having to do everything with micro and macro stability. And the third is fostering transparency and long termism in financial and economic activity. And here fostering transparency in law and economics theory is typically linked to user protection and to market integrity. So let's see what happens in practice and I will review with you very briefly what is happening in the field of credential regulation. As you know there's three pillars of credential regulation. In the first pillar are the minimum capital requirements and liquidity requirements. There the ECB has issued a guide on climate related and environmental risks which contains the expectations of the ECB in terms of how environmental risk should be included in granting credit but not only in terms of credit risk but also operational risk and other types of risk. Second and that is what I would like to dwell a little further on is the mandate given to the European banking authority to assess whether a specific social treatment of banks exposures to assets or activities mainly associated with environmental and social risk would be justified. This mandate has several aspects but one of those aspects has created some more discussion I think and that is the question whether it would be justified to introduce a brown penalty or a green supporting factor meaning that banks with exposure to environmental sustainable investment would get a preferential treatment, less capital requirements or the other way around banks with exposures to many brown investments would have to have higher capital requirements. EBA has elaborated quite extensively on this question in its discussion paper of 2022. I'll come back to that immediately. Let me first finish the overview of what's happening in financial regulation. Under pillar two the supervisory review and evaluation process we have reports from the European banking authority on the management and supervision of ESG risks from 2021 and ECB has given a thematic review on climate and environmental risks just last year leading to guidance to over 30 banks and even a change in capital requirements to a few of them in view of this climate and environmental risk thematic review. And then finally there's the third pillar is market discipline and there again there are new additional requirements on requiring large credit institutions to disclose their ESG risks and ECB is following up closely on that it's improving but far from perfect I think is a short summary. So what to think of this in view of the question is sustainable finance a new objective of financial regulation? If you look at the measures which have been taken so far I think the answer is no. If you look at what has been done under pillar one and pillar two so far it actually comes down to making sure that there's a more sophisticated assessment of ESG risks and that will obviously help to have better capital requirements which are better aligned with the bank's risk profile. This is the stability objective. It may have beneficial effects on sustainability as well. It may lead to a situation where brown companies may face higher credit interest rates and so this may urge them indirectly to do better on an environmental basis but as such it is stability. If you look at the third pillar transparency on ESG risks as I said this will lead to market discipline or that's the idea that it should lead to market discipline and this should improve user protection, improve market efficiency and market integrity. So again I would say this is not really showing any proof of sustainable finance as a new objective of financial regulation as a new autonomous objective. We don't need it to explain what is happening right now. And then I come back to the report of the EBA on the possibility to introduce a brown penalty or a green supporting factor. Those requirements if they would be introduced and I think chances are small if you read the EBA report if they would be introduced they would not be explainable on the basis of existing policy objectives. On the contrary a green supporting factor meaning lower capital requirements for greener banks would be counter countering bank stability. You would lower capital requirements not necessarily on the basis of lower risk but on the basis of ESG consideration. So I would say there's a conflict there with stability. You can especially not explain it. A brown penalty would not conflict with stability in the sense that you would add capital requirements and so banks with brown exposures would become stronger but it would also not be explainable on the basis of bank stability. So if that would be introduced it would also show that sustainable finance would be an autonomous objective of financial regulation. I'm not saying that I'm in favor of that I'm just trying to make the state of play. Let me come to my next question. What if there is a conflict between different objectives of financial regulation as we saw for instance could happen if a green supporting factor would be introduced. Which one would have priority? Well traditionally everyone agrees macro stability is the most important objective of financial regulation and we've seen in the past that regulators would not hesitate to harm user protection if macro stability comes into play and that is logic. During the crisis many investors have lost huge amounts of money but the banks were saved in order to save bank stability and that's logic in view of the amount of losses involved which are much higher also from a legal perspective it makes sense macro stability serves the public interest, investor protection serves the private interest and so the public interest should prevail. So where to situate sustainable finance as a means to ensure the survival of human life on the planet or as Isabel called it there's an existential risk there you could say that this should become the most important objective of financial regulation and even of financial regulation is that the case well I wouldn't say so I don't think so why well the main that's not so easy to come up with a why I think everyone in this room will intuitively say no stability is the most important objective of financial regulation and we're trained in that sense and especially at the ECB I think everybody would say you're crazy if you would say otherwise but why why if you look at this existential risk of sustainability I came to the conclusion that probably the most important reason why to why sustainability is more important in financial regulation is that we only have financial regulation to ensure stability financial regulation including supervision obviously whereas in terms of sustainability we have so many other tools financial regulation is only one tool in the toolbox there's tax law there's direct environmental rules there's labor law which you could impose so you have so many tools for stability you only have one tool and that is financial regulation and supervision and so I think that is the main reason why stability objective should not be under undermined by the sustainable finance objective in financial regulation a second reason I mentioned at the beginning of my speech already is that high levels of stability integrity and consumer protection are indeed key for a sustainable economy we've seen in the past couple of years said in times of crisis and times of instability when people get poorer they go back to very unsustainable techniques I saw with the high gas prices people start heating their houses again burning wood which is very bad so we need a well functioning economy we need stability for sustainability to happen so conclusion sustainable finance measures should not undermine stability objective to conclude what is the role of sustainable finance regulation then well I think sustainable finance regulation is a tool but it's just actually an intermediate tool to nudge companies to apply higher ESG standards than legally required pending stricter direct environmental social and governance regulation it is very difficult for the EU regulator to set higher environmental standards social standards in some region of the world the EU obviously has no reach and so therefore it uses financial regulations to indirectly nudge companies to still attach to higher standards but as I said in case of a conflict sustainable finance should give way to the traditional objectives of financial regulation and I'm happy to see that in fact today that is exactly what is happening the ECB and the European regulators are integrating sustainable finance in the financial framework but have done so far respecting the other objectives as I said before more far reaching measures are possible but they might undermine stability and so therefore a green supporting factor I would be totally against a brown penalty might be considered even though it may have indirect consequences which I will not go into in view of time and so that is what I would like to share with you so thank you for your attention. Thank you very much for fascinating presentation actually if I may I would just like to ask one immediate question because what you said was a bit related to what I also mentioned in my short introductory remarks is that I mean you can have this perspective that you know climate risks I mean our threat for the banks balance sheet but the other perspective is that you know financing non-green activities creates a risk for the rest of the world basically and what you if I understand you correctly you would say okay we should focus in particular on the first part and we should not focus on the second part which reminds me very much on the discussions we also had on monetary policy but I would like to ask you I mean it's the cases maybe the case may be clear if there's really a conflict but say there is no conflict with the standard stability objective would you still say there's no case for looking at this externality that the financing of banks has I think we should and as I said there are sometimes indirect consequences and so therefore with this brown penalty I think further research is needed before you would introduce it because it can lead to stranded assets which can have consequences for the economy which we would not like stranded assets meaning that there are no alternative green activities to a certain brown activity so what will happen if no one everyone stops financing that it might also lead to green asset bubbles if you have incentives such as a brown penalty which would lead banks to massively invest only in green investments that can lead to an asset bubble which would also could also be a cause of stability so even if there's not a direct threat to stability I think it is necessary to still be very careful and as you said look at further externalities and consequences which might happen on the other side if there is no impact on stability at all I would be very much in favor of having sustainable finance measures which would even if they would not further stability but I don't think the ECB could do it within its current mandate as Frank yesterday said the ECB is a policy taker so there it should be clear from the CRR for instance that the ECB should get this explicit mandate. I mean on the one point you mentioned of course if the transition is coming too late and in a disorderly fashion the financial stability was maybe even larger right I mean and the stranded assets and so on but let me maybe open the floor to the panelists maybe you want to react to each other's contributions and maybe you have some comments to make and then you already may think about questions you may have to this excellent panel. Thank you so much I just wanted to react and maybe pose a question if I may abuse my prerogative to Juliana because I'm really fascinated by your approach at this open ended guidance and you know you are making very strongly the argument for this approach and less resort to the detailed rules and regulations and the enforceability and the strictures that go with that and I do see that but coming from the perspective on an administrative law judge who is in favour of administrative law generally I just want to be a little provocative and I want to ask you where you think the line is between because you made the argument that the advantage is that I think you said exempt from administrative law requirements in the context of some of these approaches because and so you save the time and consultation and all of the things that we know go with administrative law and I suppose we lawyers might argue legal certainty as well in that context so where do you see the line as to when norm should become a norm of administrative law where does the line come where we should go into the realm of administrative law for the reasons that I think we're familiar with the reasons why administrative law is there because there should be fair procedures there should be transparency the possibility to consultation public participation in the environmental context, legal certainty and so forth so where for you is that line between those two categories? Well at first I had used the term principles based regulation but I know we are all very traumatized about this term from the GFC so I changed the open ended regulation but it's still binding regulation it's not only principles in the sense of norms that have not gone through the notice and comment process and all the other administrative requirements when I said that what is exempt from the administrative law requirements is not the open ended regulation it's the next layer the supervisory guidance that follows the regulation so I don't know if maybe I was not clear there but I completely agree with you from a legal standpoint you need certainty you need fair warning and if you want people to be or institutions to be sanctioned for violating rules these rules have to go through this process what the proposal here if you think about it it's not new at all because the BCP the Basel principles for effective supervision the second principle is independence and accountability for supervisors and the first criterion the first essential criterion is supervisory discretion so the proposal here is give more power to supervisors at least at first at least while we don't have enough elements to draw a very detailed regulation as may be wanted because we know that excessive complexity in regulation is not very effective either so do you have other comments or shall we move to the next slide maybe briefly I have a question for each of you if I may to you I would ask you said guidance is non-binding I always have much difficulty in accepting that because in my view guidance is very binding for market participants I mean guidance is the interpretation given by the EBA or by the ECB of certain rules and so that interpretation is then a very large interpretation for banks and they have to comply with it and they can be sanctioned if they don't comply with it unless one bank would go to the European Court of Justice and challenge that interpretation but until then I would say it's binding I would like to hear what you think about that I think this is really jurisdiction specific so it depends on the legal status of each instrument in each country but I as a general standpoint I would say that we could sanction an institution solely based on guidance guidance comes after binding regulation so in that sense and if I may for you Susanne I also have a question you mentioned this case from Austria and climate earth on the question whether environmentally sustainable activities should also encompass nuclear energy and that this is a case hanging before the court and this made me wonder how do you deal with questions like that because we just heard ECB as a policy taker is the court and a policy maker if you were going to have to answer to such questions which is very, very politically sensitive. Well that's a very easy question to answer because I can't say anything at all it's a pending case sorry just in general how do you deal with these things politically sensitive without saying how you will answer this particular question. So under the treaties we go to our task under the treaties which is to ensure that the interpretation and application of the union law is observed so we look at the text of the legislation issue using the well-developed methods of legal interpretation with which we're all familiar here. So that's not easy I guess. So yeah so I see a question oh I see many questions oh my god. Okay so we take all the hands that are up now and you have to be quick and then my panelists are going to be just as quick on the in their answer but maybe you can be very short because we're can we go five minutes into the break? Five no more okay. Okay so David Ramos and Carlos at the university I wanted to subject to considerations to the panelists. One when it comes to the integration by supervisors of climate and environmental protection there is usually the tendency to see these as a way of supervisors to somehow be dragged into the policy making fear of environmental protection but consider the opposite scenario because if legislators and policy makers the policy makers do not do enough that increases risks with which forces supervisors to do more and that perspective I wanted you to see what do you think about that perspective because sometimes it is the misalignment between policy makers and objectives that creates the risk in my view. The second one and has to be the brown penalizing factor sometimes I have trouble understanding what is a brown penalizing factor because this tension between sustainability and stability to meet looks sometimes like attention between time horizons. We can act now with a brown penalizing factor which may be a little bit coarse measure or we can do nothing and wait and then adopt much more intrusive measures which may jeopardize the supervisory institution and subject it to more important legal challenges. By renouncing acting early aren't we simply postponing what is going to be an inevitable legal reckon. Thank you. Please limit yourself to one question and be a bit quicker. Thanks to all the panelists for a very interesting panel. I had a question to Suzanne to maybe say one more sentence or two sentences on the roll of the judge so you've said that the taxonomy is very appropriate instrument to give effect to article 11 for integrating environmental considerations into policy and then also that judges should not just defer to the agency on their evaluation of whether what is the right way to act on those duties but also really scrutinize in detail what to do to give effect to that so I was wondering how to envisage that concretely so if there is an independent agency that decides not to rely on the taxonomy for designing its financial market interventions what would be the sort of scrutiny which is for example if there was a consideration about administrative burden would that be how would you evaluate that and how fine-grained should you imagine that sort of review? Daniel Guhisi I wanted to expand a bit on what Professor Kingston mentioned in respect to this provision in our framework in 127 which is taken from the competition law of the provision about efficient allocation of resources it's obviously in its origins a bit liberal neoliberal hinged provision about essentially preventing banking union from becoming a transfer union however in the current situation it's a question to the whole panel are we already there with robustness of the science data about climate change to consider that efficient allocation of resources is not efficient enough if you don't see the environmental impacts is it then the basis for us or the robust enough legal basis for us to adjust accordingly our frameworks instruments also prudential instruments and what about then the typical Hayekian let's say objections about lobbyism bureaucratic steering of economy obviously I'm looking at Professor Schnabel as well in this respect many thanks. Claudia Dirschsch I would like to notice the evolution of the discourse Isabelle Schnabel in 2019 was saying what now the court is saying and it was shocking a lot of people so I would expect that in one or three years we would be talking about the integration of this it's not to mind that we are speaking about we are talking about financial stability we are talking about control of prices so not stability press stability so and my question would be to Suzanne Kingston taking use of what Juliana Bolsani coming from front runner in this area the Banco do Brasil just said would it make sense and it would be acceptable according to the EU framework to FDCB going behind what is now said for example in sustainability reporting where the commission was very conservative regarding for example biodiversity reporting the reporting of biodiversity risks that are now voluntary in spite of the pressure from many sides to making them this kind of reporting compulsory because in fact we have a financial stability issue that was my question thank you. I'm afraid I can only take one more question. It will be very quick it's in the same direction of a previous question I'm going to ask Alexander Cuomo from Masryk University aren't we facing a sort of inconsistency with the two different time horizons for how we calculate financial risk so how is it possible that we're having on one side and also potential supervision but also monetary policy this new claims also supported by science that in the long term there will be risks that will be massive but at the same time we're dealing with a legacy framework where we deal with a kind of middle term financial risk so banks don't see what's coming and how can you so once we acknowledge this conflict do you think it's more for research to kind of evolve modeling and markets at some point will catch up or is it more for the law to give more discretion in the end and open end regulation to authorities so thank you very much for your question so let's start with the other and then we just move on. Thank you very much and let me first take the question about time horizons because indeed that is a very important problem I think to try to be briefly we need stability in the short term and that is a focus of the ECB, maintain stability at all times in the short term and the long term to ensure sustainability in the long term and so therefore I think stability needs to come first in order to be able to have sustainability in the long term to come back to your question what is needed I think research is needed because I agree that you with the proposition but to make to find short term solutions you have to make sure that they do not do more harm than they do good and in the sense that there's a lot of lack of data a lot of uncertainty we need to calibrate very carefully what possible consequences would be for instance of a brown penalty because if it would do harm on short term stability you're even farther off from sustainability so therefore I think research is would be the answer rather than additional rules. Yes I agree we need an evolution with the models and science but I do think we also need to change culturally in this culture of the institutions and maybe also in regulations because but we have to get started with this we cannot just stay waiting for things to change and it is challenging because it is a change of paradigm so that's very interesting I'd like to make a short comment on the if policymakers don't do enough I like that policy takers will have to do more and that's true because it will have more risks and but on the other hand this is a can be similar to what happens with fiscal policy and monetary policy when government does not do good fiscal policy monetary policy has to do more work so it's always a balancing perspective and conendrum there maybe. Thank you for the fascinating questions maybe just to come first to the question about the role of the judges and just to be very clear I wasn't suggesting that the court does again the task of examining all of the environmental and scientific evidence takes the decision again to know that's not at all what the principles of judicial review as I understand them say at the moment but what they do say I think and that's very important is that not only are the courts looking at the question of procedure all of the standard aspects of administrative law that we would be used to but they are going further and they are asking whether according to what the decision maker has themselves said and what the legislatures have themselves established as binding including objectives as a case may be drawn from the Paris agreement can one on the basis of the evidence that has been put before them by the decision maker in defending their decision can one logically draw to the conclusion on the basis of consistent and reliable evidence that that objective will be met I'll give you the example again of the friends of the Irish environment case for the Irish Supreme Court in that case the Irish Supreme Court was asked well will this climate action plan that the Irish government has published is that consistent with the climate act so on the face of it you might have thought that is something that no court is going to want to have to look at because it is a classic policy issue but how they reasoned was they looked at what the climate legislation had established in terms of objective and on the other hand what the evidence that the decision maker in that case the government put before them as to the credible trajectory or as the case may be not credible trajectory as to how they were going to meet that objective do you see what I mean so it is actually quite a different task I think than the court substituting themselves from the decision maker but rather it is putting it up to the decision maker to show them reliable and consistent and credible evidence that the obligation is going to be met it's a difference but a very important difference I think the case about the question about environmental evaluation and are we already there is the data robust enough it was your question I think yeah I think that's actually a very interesting question and I think on that point you would find it very interesting to look again at what DG Comp has done in that context and I say that because it was a huge debate in the competition context exactly that question the data is not there we don't have the sufficient granularity of data for us as competition authorities to be able to use but what you see is it fascinatingly in that context the national competition authorities effectively because DG competition hadn't taken the first move they went ahead and the Dutch and the Greek competition authority commissioned a report you might have seen it on valuation of environmental goods and harms that fed into then the DG Comp Horizontal Cooperation Guidelines which has a large section on valuing non-use and use values you know very environmental economics that would never have been there previously in competition analysis taken from environmental valuation techniques so all I'm saying is I think it is possible even though we may not be used to looking at environmental valuation techniques outside the environmental context to Claudia just very quickly just very important point I'm not the court it's just I just wanted to say that so to say that the court has moved position unfortunately I'm not the court I'm just me but having said that I think it's fair to say that what I said chimed a lot with indeed what as you reported it's been saying so thank you very much so thank you thank you very much so first of all of course to my great panellists for their contributions for all your great questions so for those who could not ask that question so you will have a very short coffee break I'm afraid where you may try to ask your questions in any case I usually enjoy the discussion thank you very much for being part of that and sorry for being a bit too long but I think it was worth it so thank you very much.