On 15 July 2025, Dutch Central Bank (DNB) published an updated guide on climate and nature risk management for the financial sector (the Guide). The Guide provides insights in supervisory expectations in relation to risk management and is applicable to Dutch based insurers, pension funds, investment firms, alternative investment fund managers, electronic money institutions and payment institutions. The Guide is not applicable to banks (both significant and less significant institutions) since these are within scope of the ECB guide in view of DNB.
In this blog, we will highlight the main supervision areas relevant for the financial sector.
Background
According to DNB, climate and nature risks can lead to various prudential risks for Dutch financial institutions. DNB expects financial institutions to identify and adequately manage climate and nature risks and believes improvements in this respect can be made. DNB supports the Guide, as it aims to contribute to proper management of climate and nature risks through the provision of good practices.
What is new?
The Guide is an update of the first version from 2023 and has been finalised following consultation with stakeholders across the financial sector. Compared to the previous version, legal frameworks have been updated and expanded. New insights on ESG risks have been included, particularly in the areas of nature and legal sustainability risks. Good practices have been revised or expanded, including new guidance on managing nature-related risks and the integration of climate action plans.
The Guide
DNB announced it will use the Guide in its prudential supervision on climate-related and nature risks. For banks (both significant and less significant institutions), DNB applies the ECB Guide of November 2020.
DNB has identified four main supervision areas: (i) business model and strategy, (ii) governance, (iii) risk management and (iv) information provision. The Guide consists of a cross-sectoral section and sector-specific sections. We have summarized the key supervision focus areas below.
Supervision focus areas
- Business model and strategy: financial
institutions should include material climate and nature risks in
their business model and strategy. To determine the materiality,
qualitative and quantitative assessments should be conducted. In
addition, stress tests and scenario-based analysis should be
performed to substantiate the business model and strategy.
- Governance:DNB expects climate and nature
risks to be embedded in the governance of financial institutions
including in internal key functions. DNB will pay explicit
attention to the suitability of policymakers related to the
management of climate and nature risks. Financial institutions are
also expected to follow a sound approach to align the remuneration
policy with the institution's strategy on climate and nature
risk management.
- Risk management: financial institutions should
explicitly include climate and nature risks in their risk appetite
and integrate it into the full risk management cycle from
identification to evaluation. Scenario analyses and stress tests
should be used to assess climate and natural risks exposures and
set adequate risk tolerance levels and indicators. Also, financial
institutions are subject to reporting requirements.
- Information provision: this is a shared supervisory domain of the AFM and DNB. The Guide describes the supervision areas of DNB which will relate to prudential reporting and prudential implications arising from external reporting in connection with climate and nature risks.
Implications for supervision
DNB has reaffirmed its continued focus on climate and nature-related risk management. The Guide offers valuable insights for financial institutions on what to expect in terms of supervisory expectations, illustrated through practical examples and good practices.
DNB's supervision is risk-based, meaning that the scope and intensity of supervisory activities depend on the type and size of the financial institution. While the Guide provides examples of good practices, DNB also welcomes alternative interpretations of laws and regulations—provided their soundness can be clearly demonstrated to DNB.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
