News item | 13-03-2023 | 10:00 am
With the signing of the climate commitment in July 2019, banks, pension funds, insurers and asset managers have indicated that they will participate in the implementation of the Paris Climate Agreement and the Dutch Climate Agreement. The parties agreed that they will publish their action plans including reduction targets for 2030 by 2022 at the latest and explain what actions they are taking to contribute to both agreements. The readiness of the financial sector to act appears to be great. For example, 96% of the signatories have the ambition to bring their portfolio in line with the 1.5-degree scenario and ultimately achieve a net-zero portfolio by 2050. 90% of signatories have an action plan with a reduction target for 2030.
At the same time, Minister Kaag of Finance and Minister Jetten for Climate and Energy will explore how possible legislation can be used to support the climate commitment of the financial sector. The ministers praise the sector’s commitment and willingness to take action to contribute to the goals of the Paris climate agreement. However, an acceleration of the transition is necessary, the differences between action plans are sometimes large and actions often need to be more concrete.
Minister Kaag: “The financial sector has shown great ambitions and that deserves kudos. To increase the contribution of the sector, I want to explore with the sector how possible legislation can contribute to strengthening their contribution to the sustainable transition. This should confirm the good initiative of the sector and level the bar between frontrunners and laggards at a high level of ambition.”
Minister Jetten: “Climate change is the challenge for our generation and requires a contribution from all sectors of the economy. The government’s goal is at least a 55% CO2 reduction by 2030 and climate neutrality by 2050. The government is creating the right preconditions for this with an optimal mix of standards, pricing and subsidies. The financial sector plays a crucial role in this transition and that one want we therefore provide optimal support in a timely manner. “
Possible legal instruments that can be considered are:
- a best efforts obligation to bring financing and investments in line with the objectives of the Paris Climate Agreement,
- an obligation to draw up a climate plan, with clear rules about its content, and an obligation to implement the plan.
- an expansion of legal requirements to include engagement policies (commitment) to feed.
These are just a few lines of thought and further input from the sector, science, regulators and civil society organizations is desirable. The central question is what legislation, if any, would be most effective in accelerating the financial sector’s efforts to align their portfolios with the Paris goals.
The ministers will discuss this with the sector.