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DNB is aligning its own reserves with the Paris Climate Agreement

Press release

De Nederlandsche Bank (DNB) invests around €9 billion of its own reserves and aims for a solid financial return as well as a positive impact. To positively contribute to the transition to a carbon-neutral economy, DNB is bringing its investments in equities and corporate bonds in line with the Paris Climate Agreement. This means that the carbon footprint of these investment portfolios needs to be halved by 2030. 

Published: 06 December 2023

Een voorbeeld van duurzaam beleggen, een windmolenpark.

The European Union (EU) has made various commitments as part of its efforts to limit global warming to 1.5 degrees Celsius compared to pre-industrial levels. For example, European carbon emissions are targeted to be at least 55% lower by 2030 than in 1990, and the EU must be climate-neutral by 2050. DNB is translating these commitments into choices in the management of its own reserves.

With our own reserves we want to make a positive contribution to the transition to a carbon-neutral economy. Our aim is to bring all investments in equities and corporate bonds in line with the Paris Climate Agreement by 2030, and to halve the carbon footprint of these portfolios compared to the base year (2019). We have set this target to achieve real-world carbon reductions, rather than simply to decarbonise our portfolio. We will evaluate the effectiveness of our approach annually, analysing whether our lower carbon footprint is actually due to carbon reductions by the companies in our portfolios. 

Objective and composition of own account portfolios

With the own account portfolios we aim to achieve a solid financial return relative to our funding costs and to contribute to broad value creation on environmental and social issues. Monetary transactions and assets managed by DNB on behalf of third parties are not included. We hold part of our own account portfolios to meet any potential foreign exchange needs of the European Central Bank (ECB) and the International Monetary Fund (IMF). In order to be able to respond to such requests quickly, part of the portfolio must be sufficiently liquid. The own account portfolios make up about 1.5% of our balance sheet.

We invest in different asset classes. About half of the €9 billion is invested in bonds issued in foreign currencies by (semi-) sovereigns, supranational organisations and agencies. These portfolios are managed internally by a team of portfolio managers. The other half is invested in equities and corporate bonds, and these portfolios are managed externally by various fund and asset managers.

Calculating the carbon footprint of the equity and corporate bond portfolios involves looking at the exact emissions of the underlying companies and what share of these companies we own. This enables us to determine what percentage of their carbon emissions we finance. We intend to reduce the carbon footprint of our portfolios over time, and use three strategies – invest, engage and avoid – to contribute to the transition to a carbon-neutral economy.

Steps towards net zero

We invest in companies with lower carbon emissions or that have specific plans to reduce their emissions. At least 20% of our internal portfolios are invested in green bonds. By issuing green bonds, parties raise money to invest in projects that help tackle climate change and or contribute to other environmental objectives.

We engage in dialogue, both indirectly with companies and directly with fund managers. Through a dedicated voting and engagement manager, we will engage with the companies in which we invest within our equity mandates and start voting at shareholder meetings from 2024 onwards. In addition, we will engage with our fund managers to encourage them to phase out investments in coal-linked activities and to improve their reporting on the extent to which the investee companies commit to the goals of the Paris Climate Agreement.

We avoid companies that derive a large part of their revenue from fossil fuel activities and are not committed to the Paris Climate Agreement. We also avoid companies that violate certain standards, such as the United Nations Global Compact principles, and we will exclude companies that are involved in the production of or trade in controversial weapons or that produce tobacco.

Sustainable and responsible investing at DNB - December 2023

Download Sustainable and responsible investing at DNB - December 2023

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