Profundo has published a report on Dutch financial institutions’ climate action plans on how they will align the carbon emissions in their investments and financing with a 1.5 degree scenario to contribute to the Paris climate goals.

It surveyed the action plans of 10 major financial institutions in the Netherlands, with the average score being 4.5 out of 10.

Dutch pension fund ABP received the highest score with 5.3 points, while insurance firm NN Group received the lowest score of those surveyed with 3.3 points.

Profundo also surveyed pension funds BpfBouw, PFZW and PMT.

BpfBouw received a score of 3.6, while PFZW received a score of 4.2 and PMT scored 5.1.

The financial institutions were scored on their commitment, measuring carbon footprint, target setting, target scope, and instruments.

BpfBouw scored the lowest on commitment out of the pension funds surveyed, with 7.5, while the other three pension funds all scored 10.

However, BpfBouw scored joint highest on measuring their carbon footprint, with it and ABP scoring 6.5, while PFZW and PMT scored 4.7 and 3.8, respectively.

ABP scored highest on target setting (6.5), while PMT scored highest on target scope and instruments, at 4.6 and 7.5, respectively.

The financial institutions surveyed scored an average of 9.3 for commitment, 5.5 for measuring carbon footprint, 4.2 for target setting, 3.3 for target scope and 4.5 for instruments.

Eerlijke Geldwijzer recommended that Dutch financial institutions commit clearly to a 1.5 degree climate scenario, translate climate change commitments to an action plan with concrete reduction targets, exclude any form of financing for new fossil fuel extraction plans, and make sure any action plans are formed into specific targets and objectives.

It also urged them to ensure action plans include both an absolute reduction target for the whole portfolio and as targets for the various economic sectors represented in their portfolios, develop a balanced and effective strategy employing different instruments, to not use carbon offsets to compensate for the emissions of portfolio companies, and ensure sufficient disclosure and transparency to make their climate action plans effective, comprehensive and understandable.

“The measurement shows that there is work in progress,” said the Dutch Federation of Pension Funds.

“For example, in 2023 the institutions will implement the guideline that provides more clarity about which elements belong in an action plan and how the CO2 content of loans and investments is measured.

“Progress is also planned in the action plans on setting goals and measuring the scope. The availability of emission data will increase in the coming years thanks to the European legislation Corporate Sustainability Reporting Directive, which will make it possible to better measure the emissions at the end user (scope 3).

“By publishing the action plans, the financial institutions indicate that they are committed to solutions to achieve the Paris climate goals and how they want to do this. This also requires coordinated cooperation between the government, the business community and the financial sector to enable the acceleration of sustainability.

“The government by setting standards, deploying and subsidising the right financial incentives. The business community by embracing the transition, and developing sustainable products and services and making them profitable​.

“The financial sector itself is taking its responsibility by focusing its portfolios even further on sustainability and financing profitable sustainable projects.

“Pension funds mainly focus on the investments in which they can make the greatest impact and cannot (yet) steer everywhere due to unreliable or missing data.”

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