5  In this regard, given that more analysis is needed before we have better answers for the implications of climate change on the economy and on monetary policy, our first objective should be to step up our efforts, as both the Banco de España and the Eurosystem are doing, to develop the tools and models needed for such an analysis. In addition, fully incorporating climate risks into our internal risk management may well collaborate to expand our ability to deliver on our price stability mandate. Climate change will indeed affect the risks of the assets held on our balance sheets. Monetary policy implementation exposes us to such risks directly through holdings of assets and indirectly through collateral pledged by counterparties. Therefore, and very much related to my previous comments on the implications of climate change for the financial sector, we should take due consideration to the appropriate assessment of climate risks in the overall risk management of our stock of assets and also on the specific criteria for new purchases in asset purchase programs. For example, one step would be to introduce climate-related disclosure requirements in order for an issue or issuer to be eligible for purchases. Another one would be to expand the use of ratings that adequately include in their methodologies the impact of climate risks in the financial profile of issuers or specific issues.
Firstly, lower productivity growth leads agents to expect lower income growth in the future, prompting them to moderate their spending in the present. The resulting increase in saving exerts downward pressure on interest rates. Secondly, the increase in life expectancy in advanced economies has led households to increase their saving so as to finance their retirement period. Thirdly, rising demand for safe saving instruments in a context of high and growing economic uncertainty, coupled with a relatively scarce supply of such instruments, has put further downward pressure on equilibrium interest rates. Whatever its source, the decline in natural rates has shrunk the space for interest rate policy owing to the existence of a lower bound on nominal interest rates, thus making it harder for central banks to achieve our inflation aims. Climate change will likely affect the natural interest rate, but it is not obvious in which direction. On the one hand, it could further depress natural rates through negative effects on productivity, such as the impact of higher temperatures on labour supply and the destruction of capital stemming from natural disasters. Moreover, increased economic uncertainty associated with the impact from climate-related risks could lead to higher precautionary saving and further pull natural interest rates down. On the other hand, the transition towards a more sustainable economy will require substantial investment in green technologies, which may push equilibrium interest rates up. And if such investment succeeds in raising trend productivity growth, it could partially undo or even reverse the decline in natural interest rates.