Can Banks Deliver Net Zero? Netherlands Turns Climate Commitments Into a Financial Risk Test

The OECD warns that net-zero pledges can become financial risks when banks, insurers and pension funds lack credible transition plans, reliable emissions data and measurable progress. It urges regulators to combine climate indicators with financial-risk measures, while governments and development partners strengthen data systems and private institutions turn the transition into sustainable investment opportunities.

The Netherlands is entering a new phase of climate finance in which net-zero promises by banks, insurers and pension funds are increasingly becoming a financial-supervision issue. An OECD assessment developed with De Nederlandsche Bank (DNB), with support from the European Union, finds that climate commitments can create legal, reputational and wider prudential risks when ambitious targets are not supported by credible transition plans. Drawing on disclosures from 43 Dutch and other European financial institutions, the report offers policymakers a practical framework for determining whether climate commitments are translating into measurable changes in lending, investment and risk management.

From Climate Pledges to Financial Risk

The scale of the transition makes the issue important for financial stability. In 2019, 57 Dutch banks, insurers, pension funds, asset managers and sector organisations signed the Dutch Financial Sector Climate Commitment. Meanwhile, the Netherlands and the European Union are working toward a 55% net reduction in greenhouse-gas emissions by 2030 compared with 1990 levels and climate neutrality by 2050.

For financial institutions, missing these transition pathways is not simply an environmental problem. Companies dependent on carbon-intensive activities could face higher costs, technological disruption, changing consumer demand and declining asset values. Banks financing those companies could experience deteriorating credit quality, while pension funds and insurers could suffer investment losses.

The OECD therefore argues that supervisors should examine whether financial institutions are actually moving toward their stated targets rather than simply counting how many institutions have made net-zero pledges.

Better Data Could Become the Backbone of Climate Supervision

One of the report's strongest findings is that climate data remain uneven across the financial sector. Large banks currently provide the most detailed information, including financed emissions, sector exposures and indicators showing whether their portfolios are aligned with climate pathways. The six largest Dutch banks analysed account for about 84% of the country's banking assets, making their disclosures particularly important.

Pension funds and insurers generally provide less granular information, often relying on portfolio-wide financed emissions, fossil-fuel exposure and weighted average carbon intensity.

Data quality is another concern. Major Dutch banks typically reported Partnership for Carbon Accounting Financials data-quality scores of around 3.0–3.5, where 1 represents high-quality verified information and 5 indicates greater dependence on estimates and proxies.

This matters because regulators cannot reliably assess climate-related financial risks without credible information about borrowers, investments and underlying economic activities.

The OECD recommends greater use of physical emissions-intensity indicators. Measuring kilograms of CO2 per square metre in real estate or emissions per tonne-kilometre in transport, for example, can provide a clearer picture of whether individual sectors are following scientifically credible transition pathways.

What Governments and Development Partners Should Prioritise

For governments, the message is not simply to introduce more reporting requirements. Financial institutions already operate under multiple European sustainability, banking and insurance disclosure frameworks. Additional requirements could increase compliance costs without necessarily producing better supervision.

The priority should instead be comparable, decision-useful information.

Regulators could combine emissions indicators with conventional financial measures such as sector exposure, loan maturity, credit quality and non-performing exposures. This would allow supervisors to identify where climate misalignment could translate into genuine balance-sheet vulnerabilities.

DNB's access to internal supervisory and statistical information offers another important lesson. Combining public disclosures with asset-level exposure, counterparty and emissions data can provide regulators with a more complete picture than sustainability reports alone.

For international development partners, the Dutch experience offers a potential model for technical assistance elsewhere. Support could focus on strengthening central-bank databases, corporate emissions reporting, supervisory capacity and methodologies that connect climate indicators with conventional financial risks.

This could be particularly valuable in countries where regulators are expected to oversee expanding sustainable-finance markets but lack reliable emissions and financial-sector data.

Private Sector Faces Risks and a New Financing Opportunity

Banks, pension funds and insurers face higher expectations as climate supervision develops. Institutions making ambitious public commitments without credible implementation could face reputational and legal risks. Poor-quality data could also make it harder for management teams to identify concentrations of transition risk before they affect portfolios.

Yet the transition creates opportunities as well. Better information about sector pathways can help financial institutions distinguish companies that are genuinely transforming their businesses from those that remain highly exposed to transition risks. Capital could consequently move toward cleaner energy, efficient buildings, low-carbon transport, industrial modernisation and other transition investments.

The OECD proposes a combined quantitative and qualitative supervisory approach. Regulators should first identify financially material sectors and assess emissions intensity against appropriate transition pathways. Where misalignment appears, supervisors can examine exposure size, maturity, credit quality and financed emissions. Where quantitative data remain weak, greater attention should be given to governance, transition plans, internal controls, scenario analysis and engagement with borrowers and investee companies.

The broader policy lesson is straightforward: net-zero finance cannot depend on pledges alone. Governments need comparable data and proportionate supervision, development partners can help build institutional and analytical capacity, and financial institutions must connect climate targets with real lending, investment and risk-management decisions. The Netherlands shows how climate policy is gradually moving from sustainability reporting into the core architecture of financial supervision.