The Dutch financial regulator (DNB) has warned that if the Netherlands were to shift towards a carbon-neutral economy too quickly local pension funds would suffer.

Dutch pension funds, it estimates, have invested nearly 5.5% of overall assets in coal, oil and gas companies.

An additional 7% of total assets has been invested in carbon-intensive sectors, such as energy production, basic industries, transport and agriculture.

By comparison, banks and insurers have invested 1.2% and 2% of total assets, respectively, in fossil fuel companies, according to DNB.

The regulator concluded that a quick transition would be likely to force carbon-intensive sectors to make large and costly adjustments.

It said it based its conclusions on data provided by three large asset managers that together manage more than 60% of Dutch pension assets.

Commenting on the findings, finance minister Jeroen Dijsselbloem emphasised the importance of a gradual carbon-neutral transition to avoid harming pension funds.

In its report, the regulator said it saw no “acute” risk of a “bubble bursting”; the pressure on pension funds to reject fossil fuels, however, remains.

Several initiatives, including one launched by ABP Fossil Free, are calling on pension funds to divest from energy companies, citing financial risk.

The European Systemic Risk Board (ESRB) recently recommended that future stress tests of the pension sector should include measurements of climate-related risk.

Pension funds could also face upper limits on exposure to high-risk carbon assets, the board said, if regulation is amended in the wake of any stress-test results.

Elsewhere, the Swedish regulator said pension providers should consider stress testing their portfolios for the risks posed by climate change and stranded assets.