Dutch Pension APG signed a Parliamentary mandate calling for the region’s financial sector to push financial targets towards that of the government’s Climate Accord and the Paris Agreement.
The Paris Agreement seeks to cut greenhouse gas emissions by half by 2030, and the Dutch climate policy requires signatories to report the carbon emissions of their holdings beginning in 2020. By 2022, the signees must also disclose how they will reduce emissions.
“This commitment on the part of the financial sector will have a truly enormous impact. After all, the sector makes up 80-90% of the money in the Netherlands,” said Gerard van Olphen, chairman of the €500 billion ($563 billion) organization’s board, who added that the total signatories represent $3.3 trillion in assets under management. “This makes the Dutch financial sector a catalyst for and promoter of the transition that the Netherlands has to undertake.”
To date, nine large Dutch pension funds with assets under management totaling nearly one-third of van Olphen’s figure, as well as asset managers, insurers, and banks, have signed on to the government’s climate policy, according to IPE.
Progress will be monitored by an independent institution every five years.
It is not yet clear how the action will affect the funds, as many already have sustainable investment policies. To keep up with the terms of Parliament’s contract, they may have to make further exclusions in their investment portfolios.
The funds will also have to further engage with carbon-heavy companies they are invested with.
“They will have to reduce their carbon emissions themselves,” van Olphen said of the gas and oil companies. “But the fact that when we assess industry business cases, we are not only evaluating financial feasibility but also compliance with the Paris targets, which means that polluting or less ambitious initiatives in the field of CO2 reduction will have more difficulty in obtaining funding than plans that really contribute to sustainability.”
The government’s climate agreement is voluntary, and institutions do not need to opt in.