According to the Dutch Central Bank (De Nederlandsche Bank, DNB) in a recent news item, financial institutions increasingly have to take into account risks associated with climate change and the transition to a sustainable/climate-neutral economy. In light of this, and as previously announced by DNB in its CSR strategy 2020 and Supervision Outlook 2020, DNB will start taking climate and environmental risks into account when screening persons at banks, insurers and pension funds. This will happen in line with the reports, good practices, Q&As and factsheets on these risks previously published by DNB.
DNB will discuss these risks more prominently in screening interviews with candidates. For example, a candidate director or supervisor may be asked about his or her knowledge of climate and environmental risks, relevant legislation in this area, and the impact of these risks for the financial institution concerned. In addition, DNB will ask financial institutions to provide details on a candidate’s knowledge and experience in the field of climate and environmental risks when submitting screening documentation, for example as part of the description of the decision-making and considerations relating to the candidate’s appointment, or in the suitability matrix.
When assessing a candidate’s suitability, DNB applies the suitability topics set out in A – E of the Suitability Policy Rule 2012 (Beleidsregel geschiktheid 2012). This means that a candidate will be expected to:
- be able to indicate what is meant by climate and environmental risks;
- be aware of relevant legislation and regulations, including reporting obligations with regard to these risks;
- know how and is able to identify, monitor and control these risks;
- know how and where the responsibilities for these risks are assigned within the institution;
- understand the impact of climate and environmental risks in the specific context of the institution and can cite examples;
- know the strategy and policy with regard to the main climate and environmental risks;
- take responsibility for the realisation of adequate management of these risks (this applies to (day-to-day or co-) policymakers);
- ensure adequate control of these risks (this applies to supervisors); and
- have sufficient competences relevant for setting, identifying, monitoring and controlling these risks, such as a helicopter view, leadership, independence, sensitivity to the environment, strategic direction and responsibility.
DNB’s suitability screening will take into account the specific position, nature, size, complexity and risk profile of the financial institution, as well as the composition and functioning of the collective of policymakers. For example, DNB will expect a director responsible for risk management at a financial institution to have more in-depth knowledge, experience and competences than a director with a more generic portfolio.
DNB concludes by noting that a theme page will soon appear on the DNB website, which contains information on climate and environmental risks.