DNB, the central bank of Netherlands, published a guide for the supervision of climate and environmental risk management.
The guide provides insurers, pension funds, premium pension institutions, investment firms, and electronic money and payment institutions with focal points and good practices for managing climate and environmental risks. These good practices are aimed to enable the sector to embed climate and environmental risks into core processes, including cross-sectoral focal points for integrated climate and environmental risk management in the areas of business model and strategy, governance, risk management and information provision. The guide builds on the previous policy statements for climate risk management, which have been published in recent years for specific sectors and components of the management framework. The tools in this guide have been aligned, where possible, with the European Central Bank’s supervisory expectations for the banking sector. The good practices in this guide are indicative and institutions are free to take a different approach as long as they comply otherwise with the laws and regulations. The good practices are thus not binding but serve as input in the supervisory dialog between an institution and DNB on climate and environmental risk management.
In the light of the legislative and regulatory developments and new insights into the proper management of climate and environmental risks, additional explanatory notes and practical examples will be added to this guide periodically. DNB will update this guide, in about a year's time, by adding new good practices for managing ESG risks and current developments in laws and regulations. Going forward, DNB will work toward further embedding ESG factors in the risk assessments of financial institutions. In 2024, for instance, DNB expects to include ESG risks in the annual sector-wide risk analysis surveys as part of the supervisory practice. Additionally, DNB is developing ESG dashboards to gain insight into institutions’ exposure to various ESG aspects. DNB will use the information gleaned from these dashboards for various purposes, including as a basis for supervisory meetings and as input for risk assessments.
Keywords: Europe, Netherlands, Banking, ESG, Climate Change Risk, Guide, Environmental Risk, Disclosures, ESG Risk, DNB
Hasan leads Moody’s Analytics ESG methodology development. He is expert on carbon transition, nature related risks and is a guest lecturer at ESSEC Business school on sustainable finance.
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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