A survey by De Nederlandsche Bank (DNB) of Dutch financial institutions has found that most do not explicitly manage their climate-related risks, and just 10% of banks incorporate sustainability into their overall risk management.
The assessment also found that investments and loans from Dutch financial institutions are responsible for at least 82m tonnes of CO2, equivalent to half of all Dutch emissions.
The study of 127 large financial firms found that only 30% of Dutch pension funds and 22% of insurers explicitly include sustainability risks in their risk management. In addition, the use of relevant metrics for measuring sustainability risks is still under development at 59% of pension funds, 35% of insurers and 17% of banks.
Titled Towards a Sustainable Balance Sheet, the report was launched last week at a press conference on DNB supervision of the Dutch financial sector. It follows a recent European Central Bank assessment that found no major European bank even close to meeting supervisory expectations outlined last year.
Warning of the increasing risk of stranded assets, the DNB advised financial institutions to encourage companies in which they invest to manage sustainability risks, including through “qualitative credit conditions”.
“The exposures and investments of financial institutions are increasingly exposed to the direct physical risks of climate change and the risks of the transition to a climate neutral society,” the DNB made clear in a press release accompanying the report. “[Financial institutions] are obliged to have an ethical and controlled business operation, so that they have insight into all material risks and can control them. This applies in full to sustainability risks.”
The DNB will issue further supervisory expectations for managing sustainability risks in 2022, aligned with the ECB’s guide to supervisory expectations for banks.
This page was last updated December 13, 2021
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