Dutch Central Bank to Align Equity and Corporate Bond Portfolios with Paris Agreement Goals
De Nederlandsche Bank (DNB), the central bank of the Netherlands, announced today a new commitment to align its reserves, including its investments in equities and corporate bonds with the Paris Agreement.
According to the new commitment, DNB will aim to cut the carbon footprint of the investments in its portfolio in half by 2030, on a 2019 basis, with an emphasis on achieving real-world emissions reductions at its portfolio companies.
In a statement announcing the new commitment, DNB said:
“The European Union (EU) has made various commitments as part of its efforts to limit global warming to 1.5 degrees Celsius compared to pre-industrial levels. For example, European carbon emissions are targeted to be at least 55% lower by 2030 than in 1990, and the EU must be climate-neutral by 2050. DNB is translating these commitments into choices in the management of its own reserves.”
The central bank outlined its approach to reducing portfolio emissions, which will focus on three strategies, including “Invest,” targeting companies with lower carbon emissions or with specific plans to reduce emissions; “Engage,” including entering into dialogue both indirectly with companies and directly with fund managers, engaging with investee companies through a dedicated voting and engagement manager, voting at shareholder meetings, and with fund managers on issues ranging from phasing out coal-linked investments and improving climate-related reporting, and; “Avoid,” including avoiding companies that derive a significant portion of revenues from fossil fuel activities and are not committed to the Paris Climate Agreement, as well as companies that violate standards such as the UNGC principles and those involved with production of or trade in controversial weapons or tobacco.
The DNB added that it will evaluate its approach annually to determine whether changes in its portfolio carbon footprint can actually be attributed to carbon reductions at investee companies, ensuring the achievement of “real-world carbon reductions” rather than just portfolio decarbonization.
The DNB said:
“With the own account portfolios we aim to achieve a solid financial return relative to our funding costs and to contribute to broad value creation on environmentalEnvironmental criteria consider how a company performs as a steward of nature. and socialSocial criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. issues.”
Image: © De Nederlandsche Bank N.V.
