Netherlands considering Paris-aligned investment mandate for financial institutions

January 31, 2024|Written by

The Netherlands is considering requiring financial institutions’ operations to become aligned with the Paris Agreement and has opened a consultation on potential legislation that would go beyond already established EU climate regulation.

More private funding is needed to accelerate the transition to a green economy if the Netherlands wants to meet its goal of a reduction of 60% emissions by 2030, the Dutch ministry of finance said in the consultation paper.

The Dutch government is exploring what legal measures it can use to ste up progress to the net-zero transition, which could include requiring financial institutions’ balance sheets to be aligned with a 1.5°C scenario.

The consultation also asks for feedback on whether financial institutions should be required to develop and implement a climate plan. Under the EU’s corporate sustainable due diligence directive, companies may soon have to adopt transition plans, but it would only apply to larger financial institutions. The consultation asks if the Netherlands should impose additional requirements and apply them to a larger number of Dutch companies.

The consultation, released in December, asks if legislation is required and for possible alternatives to legislation. In particular, the consultation asks if stakeholders want national legislation in light of EU regulations also being developed.

Other consultation questions include whether the engagement policies of companies – how a financial institution influences the companies it finances – should be aligned with the Paris Agreement. It also asks for input from stakeholders on the potential regulatory burden of more climate legislation and how any potential negative effects could be overcome.

The ministry said it is possible that the consultation outcome could require no further legislation. The consultation closes on 15 February.

While the Netherlands has been committed to tackling climate change in recent years and recently released a package to slash carbon emissions, the election victory of a far-right party has some questioning whether the government’s policies will change. The manifesto of lawmaker Geert Wilder’s PVV party said that climate laws and measures “will go straight into the shredder”.

Meanwhile, increased protests from farmers in the Netherlands and other parts of Europe against climate laws and regulations that they say are burdensome and costly could lead to a decrease in public support for climate policies, a senior Dutch minister warned in April.

This page was last updated January 31, 2024

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