The enabling environment for a Paris-compliant financial system is robust in the Netherlands. The Dutch government offers a wide range of green financial support instruments mostly in the form of grants and tax reliefs. These instruments should primarily increase the deployment of renewable energy and energy efficiency.The DNB shows a strong commitment to greening the financial industry in the Netherlands, which it has manifested by setting up  the  Sustainable  Finance  Platform,  co-initiating  and  chairing the  international Network on Greening the Financial System (NGFS) and becoming the first central bank to sign the UN Principles  on  Responsible  Investment  (PRI).  In June 2020, several PMs started an initiative to improve the sustainability of the Dutch financial sector “Van oliedom naar gezond verstand: verduurzaming van de financiële sector”. In 2020, the Dutch government expanded the subsidy program Stimulating Sustainable Energy Production (SDE++).

The explicit commitment of the financial sector to the Paris Agreement has to materialize in the coming years. Some state-owned entities and municipalities have already developed their own climate-related criteria and divestment goals, which can grow into a nation-wide strategy. The further development of sustainable public procurement will help the Netherlands to make sure that public spending drives the Dutch Paris commitments.

The supervisory authorities  in  the  Netherlands take on a position as catalysers for integrating cli- mate related risks in the Dutch financial industry. De Nederlandsche Bank (DNB), the Dutch Authority for the Financial Market (AFM) and the Ministry of Finance all state their support for climate finance and outline concrete actions to accelerate its usage in their strategic plans. This is reflected in the advanced integration of climate related risks in stress testing and the supervisory review process in the Dutch supervisory system. Banks are asked to do a self-assessment on the impact of climate change on their portfolio.

In his role as president of the NGFS, Frank Elderson should translate methodological action on the level of the NGFS into practice in the Netherlands. The publication of a set of climate scenarios by the NGFS was a major milestone in 2020.

Potential next steps for a deeper integration of climate finance in the Dutch supervisory system are the structural inclusion of climate related factors in stress testing at financial institutions and an industry wide implementation of climate risks in the supervisory review.

On transparency, the Dutch efforts to greening the financial   system     show     distinct      progress, which is driven by country-specific as well as EU-level legislation. The Sustainable Finance Disclosure Regulation (SFDR) will increase transparency on Paris-relevant considerations to a large extent. The Dutch Corporate Governance Code requires (financial) institutions to engage in long-term value creation with their business activities. Under a comply-or-explain approach, this should imply a further push for financial market actors to support green and sustainable investments. PCAF has published a methodology for measuring the carbon footprint of investment and loan portfolios. The Dutch government has set up a mechanism in the regeling groenprojecten, which allows banks to establish green funds under a comprehensive catalogue of green activities. This allows for investment in greening the Dutch economy.

The Dutch accounting regulation could increase its focus on accounting for physical and transitional climate risks and consumers could have more transparency on climate exposure of their PRIIP or retail fund investments as the EU Ecolabel will not be in place before Q3 2021.