Nutrition Labels Help Us Make Better Food Choices. Climate Labels Could Do the Same for Sustainability

Our existence relies on the food we eat and clean water to drink. We often take these things for granted. Yet climate change poses a threat to these most precious assets, an impact frequently neglected in our daily decisions and often undervalued or absent from economic assessments. To protect these natural resources, we must adapt our behavior and start valuing them.

One solution to empower us to contribute to a sustainable future is to help one another understand the impact of our behavior on climate change and the environment. For example, mandatory food labeling shows the ingredients and level of nutrition, which enables us to assess how healthy the food is and make choices on that basis. Climate labeling allows us to assess how healthy a given product is for the environment and make informed choices. In the same vein, when banks make decisions about granting loans, they need to know about the environmental impact of their investments. So introducing reliable, comprehensible, and globally comparable disclosure requirements is important, for both the economy and the financial sector. As a central bank and supervisor, the ECB pushes banks to manage and disclose their climate-­related and environmental risks. This motivates them to ask businesses to do likewise.

Increasing transparency is key so that we can value our natural resources in our daily economic, and personal, decisions. I believe this will help better allocate our money to reducing CO2 emissions and generating a positive impact on the environment. Let’s get this done before 2030.