Climate change and the energy transition are key challenges facing the economy and the financial sector. De Nederlandsche Bank (DNB) today presents its first progress report on financial climate-related risks and opportunities in its areas of responsibility, as part of its Annual Report.
In our report, we follow the recommendations of the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD). The report discloses the steps we take to identify and mitigate climate-related risks in our areas of responsibility, which are asset and liability management, supervision of the financial sector, economic advice and statistics. For example, we carried out a stress test to examine our balance sheet in relation to risks presented by the energy transition. In addition, we identified the carbon footprint of our own-account investments. In our report, we also describe how we encourage financial institutions subject to our supervision to manage their sustainability risks.
We have based our progress report on the globally adopted recommendations issued by the TCFD. This makes us one of the first central banks in the world to report in accordance with this approach, following in the footsteps of the Bank of England. We plan to elaborate our report further each year to ensure that financial climate-related risks and opportunities are firmly embedded in our areas of responsibility.
More information Annual Report 2020
Dutch banks risk losses from coastal and river flooding through their loans to businesses. Flood measures such as dykes and storm surge barriers mitigate most of the risk, even as climate change increases flood risks. Without flood measures, expected losses would total more than €2.5 billion a year.
Read more Dutch banks' exposure to flood risks through corporate lending is limited
The market for Dutch green securitisations of residential mortgages and for green covered bonds more than tripled in size in 2023 compared to 2022, DNB figures show, reflecting investor demand for green investments.
Read more Sharp increase in green securitisations in 2023
At her keynote address at the CMPI-IOSCO workshop today, Inge van Dijk (Director Payments, Cash & Market Infrastructure, De Nederlandsche Bank) said Financial Market Infrastructures could do more to integrate climate risk in their risk management.
Read more Climate risk: what does it mean for you?
Our economy and society depend on nature. When nature deteriorates, financial and economic risks arise. Identifying these risks is uncharted territory for financial institutions such as insurers, pension funds and banks.
Read more DNB studies nature's impact on own-account equity investments
