Dutch pensions supervisor De Nederlandsche Bank (DNB) has become the world’s first central bank to sign up to the UN’s Principles for Responsible Investment (PRI).
It has also launched a new responsible investment charter, and committed to integrating six environmental, social and corporate governance (ESG) principles into its investment practices.
These principles are aimed at mitigating climate and environmental risks, advancing the energy transition, ensuring sustainable investment and business operations, promoting accessible payment systems and improving inclusive prosperity.
As part of its sustainable approach, DNB said it would investigate options regarding target allocations for green bonds and impact investing in sustainable themes, with the UN’s Sustainable Development Goals as a potential framework.
DNB said it wanted to increase the sustainability of the Dutch economy through managing the ESG risks of its own reserves, which amounted to €19bn invested in financial markets.
It said it hoped this approach would inspire other central banks as well as the financial sector.
Don Gerritsen, head of Benelux at the PRI, said: “Central banks can play a pivotal role in helping to promote responsible financial markets by looking beyond the borders of the national market they supervise.
“Using a sustainability lens, central banks can more clearly identify material financial risks and harness the opportunities of more stable, sustainable markets.”
DNB’s corporate social responsible strategy was to focus on sustainable economic growth and an “inclusive financial and economic system” in the next five years, it said.
Currently, part of DNB’s internally managed assets are invested in green bonds and bonds issued by development banks.
The regulator said it was developing a framework for including ESG criteria in its investment process, and that it would consider the use of external sources for ESG data.
ESG criteria were included in the selection, appointment and monitoring of external managers for equity and corporate bonds, it said. These managers were also required to be PRI signatories.
DNB said it would report annually on the progress of its responsible investment approach.
The supervisor indicated that it wanted to investigate climate risk within its portfolios and start measuring the carbon footprint of its investments, while also trying to apply its own climate ‘stress test’.
This article was updated on 21 March to add a statement from the PRI.