Working Group on Climate Risk: “As a financial institution discuss climate risks with customers”

In the anthology, ABN AMRO, APG, ING, Kempen, MN, Rabobank, Robeco and De Volksbank describe how they manage climate risks in their portfolios, and what the main insights and challenges are. They also make specific recommendations to the government, regulators and the financial sector as a whole.  

The institutions realise that assessing climate risks – a major challenge – requires a joint approach involving all stakeholders: financial institutions, governments, supervisors, businesses and customers. Raising awareness of risks by improving the provision of information provides greater insight into the financial impact of climate change. The Working Group therefore invites all parties to contribute to this process with concrete comments and suggestions. To this end, they will organise an expert session based on this publication after the summer.

The anthology shows that each institution has its own approach to assessing climate risks. The various conclusions based on the analyses complement each other, and show that this field of work is rapidly developing.  

1. Key insights and challenges

• Measurement, monitoring and control of climate-related risks is in its early stages. Challenges include the availability of relevant, robust climate data and common definitions.
• A dialogue with customers focussing on climate risk contributes to the transition to solutions in production processes with less climate impact, even though it is difficult to attribute the effects. The final result in carbon emissions reduction depends on many factors, such as changes in environmental and other legislation and behaviour. It is ultimately the customer who decides. Regulations are evolving rapidly; there are several new sustainability rules, policies and additional reporting requirements from supervisors, both at national and European level.

2. Key recommendations

Towards the financial sector:

• Discuss climate risks with customers. These discussions enhance awareness of climate risks, which in turn leads to:
  - A better understanding of these risks and therefore better risk monitoring and control;
  - Solutions with less climate impact.

Towards government and supervisors:

• Enrich, bundle and make relevant climate data public and easily accessible, for example in a newly established European ESG register.
• Create a regulatory sandbox for financial institutions to gain experience with climate risks and opportunities. Ensure legislation and supervision are adaptive, keeping pace with the rapid developments occurring.
• Provide clarity on the development of energy labels for homes: preferably actual energy consumption data or at least definitive labels.

3. About the Sustainable Finance Platform

The Sustainable Finance Platform is a cooperative venture of the Dutch Association of Insurers, the Federation of the Dutch Pension Funds, the Dutch Fund and Asset Management Association, the Dutch Banking Association, the Ministry of Finance, the Ministry of Economic Affairs and Climate Policy, the Sustainable Finance Lab, the Dutch Authority for the Financial Markets and De Nederlandsche Bank. The aim of this platform, set up by DNB in 2016, is to promote and raise awareness for sustainable funding in the financial sector. Twice a year, the Platform members meet to discuss the new and ongoing sustainability initiatives in the Dutch financial sector. The Platform's working groups also concentrate on various themes.

Further information

For more information, please contact Tobias Oudejans, tel. nrs. 020 524 31 00 en 06 524 96 961.