NETHERLANDS Law and Practice Contributed by: Johannes de Jong and Juliet de Graaf, Osborne Clarke N.V.
Climate Risk Management Currently, climate risk management require - ments for banks primarily follow from the ECB’s Guide on climate-related and environmental risks (2020) (the “ECB Guide”). The ECB Guide is strictly speaking not binding for banks. How - ever, it reflects the ECB’s understanding of how banks are expected to adequately manage cli - mate risks under the current prudential frame - work, as primarily follows from CRD IV, pending the application of CRD VI in 2026. The ECB, as direct supervisor of significant banks, applies the ECB Guide in its supervi - sion. The DNB also applies the ECB Guide in its supervision of less significant banks, but in a proportionate manner. The supervisory expectations in the ECB Guide can be summarised as follows: • Business strategy: Banks should integrate short-, medium-, and long-term climate risks into their business strategies. • Risk appetite and governance: Banks should incorporate climate risks into their risk appe - tite frameworks, allocate responsibilities, and report aggregated risk data. • Risk management: Banks should integrate climate risks into the risk management frame - work, conduct regular reviews and consider these risks across a range of risks, including credit, liquidity and operational risks. In 2022, the ECB set a deadline for banks to achieve full alignment with supervisory expecta - tions in the ECB Guide, ensuring the integration of climate and environmental risks into stress testing frameworks and the ICAAP. The ECB has already communicated that it has started enforcement towards banks that have
failed to adequately manage climate risks in line with the ECB’s expectations. In 2026, CRD VI will integrate ESG risks directly into the existing prudential framework for risk management by banks. Compared to the ECB Guide, CRD VI will impose more detailed require - ments on the identification, assessment, man - agement and monitoring of ESG risks. The ECB will also publish guidelines for the new CRD VI requirements on ESG risks. ESG Disclosure Requirements As of 2025, CRR3 requires banks to enhance their disclosures for ESG risks. These disclo - sures should distinguish between environmen - tal, social and governance risks, and differenti - ate between physical and transition ESG risks. Notably, CRR3 introduces regulatory reporting on ESG risk exposures as well as on the integra - tion of ESG risks into the strategy, processes, policies, governance and risk management of banks. In 2025, the first banks will be required to pub - lish a sustainability report in accordance with the Corporate Sustainability Reporting Directive (CSRD). Dutch banks meeting certain size crite - ria will have to publish a sustainability report cov - ering 2024, together with their annual accounts. Other ESG Requirements Other ESG requirements relevant for Dutch- licensed banks include, but are not limited to: The EBA Guidelines on loan origination and monitoring: These guidelines detail how banks should incorporate ESG factors into their credit risk policies for corporate lending. • DCGC: The DCGC includes best practices on sustainability, emphasising long-term value
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